Mortgage insurance is a policy established to protect a lender from a situation where the borrower can’t make his mortgage payments. Mortgage insurance premiums (mip) are commonly associated with FHA (Federal Housing Administration) loans but some private companies also offer these policies.
Getting a mortgage backed by the Federal Housing Administration can be a great deal. Down payments run as low as 3.5 percent, compared to 20 percent for a.
A mortgage insurance premium is the monthly payment you make for your mortgage insurance policy, which protects your lender if you stop making payments on your home loan. You’ll most likely have to pay mortgage insurance if you make a down payment that’s less than 20 percent of the home’s purchase price.
Mortgage insurance is a financial guaranty for the lender that will help to reduce or eliminate a loss in the case of a default by the borrower, and it is almost universally required on loans where there is less than twenty percent equity.
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Whether it’s called "private mortgage insurance" (PMI) or just plain "mortgage insurance" (MI), mortgage insurance is an insurance policy which protects the lender in the event that you, the borrower, fail to make your mortgage payments. You pay for a policy as an inducement for the lender to offer you financing.
When you take out a mortgage and have a down payment of less than 20% of the home’s value, you typically have to pay private mortgage insurance (PMI). But if you’re securing a Federal Housing.
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FHA mortgage insurance explained fha loans are backed by the Federal Housing Administration, which is a subsidiary of the federal Department of Housing and Urban Development (HUD). Because FHA-approved lenders take on more risk – due to the lower credit score and down payment requirements – the fha imposes mortgage insurance premiums (MIP.
"Private mortgage insurance protects the lender from the elevated risk presented by a borrower that made a small down payment," says Greg McBride, CFA, Bankrate’s chief financial analyst.
The most popular – and best – alternative to mortgage protection insurance is a standard term life insurance policy. It’s like a mortgage protection insurance policy in that you pay for the policy for a certain amount of time, but it doesn’t come with all of the strings attached that mortgage protection insurance does.