Mortgage insurance, sometimes called private mortgage insurance or PMI, is an agreement made between a lender and an insurance company in which the insurance company pays the lender in the event a borrower defaults on their mortgage loan. If a borrower stops making payments on his or her mortgage, the home is entered into foreclosure and sold. For mortgage companies, the addition of mortgage insurance mitigates some of the risk they assume in lending money.
If a mortgage company requires a borrower to have mortgage insurance, the borrower is responsible for paying the annual, quarterly or monthly premium. The amount is added into the mortgage payment. Mortgage insurance is usually required for people who are borrowing more than 80% of what an appraiser estimates the property to be worth. In such cases, the mortgage lender will require PMI as a condition of the loan approval. Mortgage insurance allows a borrower to purchase a home with a down payment as low as 3 to 5% of the purchase price-even less for qualified borrowers-instead of the usual 20% down payment lenders normally require. Borrowers benefit by not having to come up with the 20% of a home’s value as a down payment in order to qualify for a mortgage.
For complete program details and to find out if you qualify, contact us today at 888-488-3807 or go to www.OneTrustHomeLoans.com.