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Equal Housing
Opportunity
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Did You
Know? |
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A move for job
purposes may be tax deductible?..consult your accountant.
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What is Private Mortgage Insurance or "PMI"?
Private mortgage insurance is insurance that helps protect mortgage companies
against losses due to foreclosure. It is provided by private mortgage insurance
companies and lets mortgage companies fund mortgages with lower down payments than would normally be
acceptable.
These loans would normally be considered too risky and make it difficult for
the originating mortgage companies to sell these contracts to third-party investors like Fannie Mae
or the FHLMC. Mortgage companies must be able to sell these contracts to maintain their liquidity
and sustain the mortgage market.
Cancelling PMI
Most borrowers can cancel their pmi after reaching 20% equity in their property. The guidelines are set
by the mortgage investors and to find out the details
of cancellation, you should contact your servicer of your mortgage. Usually the servicer will require an appraisal.
PMI vs FHA MIP
Although the insurance protection concept is similar, there are differences between private
mortgage insurance and government administered
mortgage insurance programs such as FHA or VA mortgage insurance. These mortgage insurance programs have certain restrictions.
FHA has maximum regional loan limits lower than those with private mortgage insurance. FHA can be more expensive,
take longer to receive approval, and have fewer payment options. FHA insurance will run the term of the loan,
unlike private mortgage insurance which is cancelable when it's terms are met.
FHA is usually a good for borrowers with credit history problems that might need special considerations.
Rick Lockwood, Realtor®
(512) 635-2691
Email
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