News and Events
May 16, 2008
What is Private Mortgage Insurance?
Private Mortgage Insurance is essentially a financial guarantee that an insurer assumes a portion of the risk that a lender has on a mortgage loan. The premium paid for that guarantee is passed from the lender to the borrower. The mortgage insurance company will essentially cover a portion of any loss that the lender may suffer.
PMI is required on all mortgage loans where the down payment is less than 20 percent. The actual amount that each borrower pays per month is dependent upon a number of factors including credit scores and the actual down payment itself.
Although it has often had a negative stereotype attached to it, PMI has been instrumental in helping first time homebuyers and those buyers with less than the 20 percent down payment, to be able to buy a home. To help make it more attractive to homebuyers, PMI is tax deductible through 2010 for those whose adjusted gross income is less than $100,000. Call your mortgage loan officer today with any questions.
