Mortgage insurance is designed to protect us against loss in the event that you default on your loan. When a borrower defaults and we take title, mortgage insurance reduces or eliminates their costs. In many cases, mortgage insurance is required on loans if the down payment is less than 20 percent.
There are many types of mortgage insurance. The most common is called private mortgage insurance, or PMI, and it is required on most conventional loans when the down payment is less than 20 percent. FHA loans also have mortgage insurance in the form of an annual premium (charged monthly and added to the mortgage payment) and an upfront premium.
Mortgage insurance is almost always paid by the borrower.
If you are getting a conventional loan with a loan-to-value (LTV) ratio of more than 80 percent (you put down less than 20 percent), you will need private mortgage insurance (PMI). You can also be required to carry PMI if you have a low credit score or are otherwise seen as high risk, regardless of your LTV.
All FHA loans must now carry mortgage insurance, regardless of the down payment. Qualified veterans who get a VA loan never pay PMI.
Private mortgage insurance (PMI) is most often a percentage of your loan. The higher the LTV ratio, the higher the PMI.
With an FHA loan, you will pay an upfront mortgage insurance premium (MIP) of 1.75 percent. There is also an annual premium of 0.70 to 1.30 percent.
Several years ago, FHA mortgage insurance premiums would drop off the loan after five years of obtaining a certain LTV. Now, mortgage insurance will remain for the life of the loan and can only be removed by refinancing into a conventional loan. You would need to prove by an appraisal that your equity exceeds the 20 percent needed.
PMI is much easier to get rid of, as it can drop off once you have at least 20 percent equity in your home. You can reach this through home appreciation or paying down your loan. We will require proof in the form of an appraisal, which may cost $350 to $500. We must cancel your PMI if your balance hits 78 percent LTV.
Think of mortgage insurance as a necessary cost to getting a loan if you cannot put down a significant down payment. Still, make sure you know whether it is possible to cancel your mortgage insurance and how to do so.
Mortgage Investors Group, based in Tennessee, offers residential financing in a number of states in the southeast, See MIG Service Areas. Terms and conditions to apply to home financing. We want to share with you the loan terms vary based on several characteristics and your financial profile. These include but are not limited to loan program, loan purpose, occupancy, credit history, credit score, assets, and other criteria per loan type. The repayment terms and interest rate may vary from time to time. The terms represented here are based on certain assumptions outlined below and/or noted on the loan outline page. Additional details concerning privacy, program disclosures, licensing specifics may be found at migonline.com Legal Information.MIG Loan Officers will help gather the information needed for an individual assessment to provide home financing which matches the loan characteristics with your home financing needs based on your financial profile, when you are ready to begin a full loan application. For estimates and general information before that step, the basis for which the mortgage financing information are as follows:
An MIG Loan Officer is available to help with your financial details to determine which characteristics apply to your situation for a personalized look into which loan program best fits your home financing needs. Please use the Find a Loan Officer link or reach out to Mortgage Investors Group at 800-489-8910. Equal Housing Lender 1.2020