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Mortgage Insurance (PMI) is an
insurance premium that is taken out by a mortgage company to protect
"the lender" in the event of foreclosure (this has nothing
to do with protecting the borrower- YOU). When a borrower
purchases a home, a lender in most cases includes mortgage insurance, also
called Private
Mortgage Insurance (PMI), to the monthly payment.
This is commonly done unless a down payment of at least 20% is made- or
unless a home buyer is savvy about available loan programs. The
private mortgage insurance (PMI) payment is based on the original mortgage
amount and is paid as part of the monthly mortgage payment until a
borrower 1- requests it's removal and the lender accepts the borrower's proof of value and 2- has an appraisal that shows that home
has increased in value, including improvements to the point that the loan is 80%
of the current house value. Even more misleading are the FHA loans and FHA
loan programs. Many lenders lead unsuspecting potential home buyers
into thinking that and FHA loan is a special government sponsored program.
The fact of the matter is that FHA loans are in many cases a bigger cost and
money trap to home buyers than conventional mortgage financing. For more
information on FHA mortgage insurance,
click
here. |
