The Top 8 FAQ’s About PMI

The Top 8 FAQ’s About PMI

What is PMI? Private mortgage insurance protects the lender if you stop making mortgage payments.

  1. What are the different types?
    Mortgage insurance premiums (MIP) for government loans.
    Private mortgage insurance (PMI) for conventional loans.
  2. Who needs PMI? FHA borrowers and anyone putting down less than 20%.
  3. How much does it cost? Your rate will depend on you credit score, the amount of down payment and the insurer. A typical premium ranges from $30-$70/month for every $100k borrowed.
  4. When do I pay PMI premiums?  Monthly with mortgage payments or as a lump sum at closing.
  5. Why do I need a policy? To buy a home without waiting to save 20% for a down payment.
  6. How long do I needs PMI? Until you have a 20% equity stake in the property for a conventional loan. Forever for an FHA loan.
  7. Can I avoid paying PMI?  Yes. By putting down 20% or more, or ask your lender about portfolio loans that do not require PMI.
  8. When does mortgage insurance “fall off” the loan? It doesn’t. You have to contact your lender. Once 20% equity has been built, you can request to cancel PMI.

To help shed some light on the world of Private Mortgage Insurance, we’ve created this helpful infographic to break down the most frequently asked questions about PMI.


Re-posted courtesy of Gateless

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