Mortgage Insurance is a kind of insurance policy. It compensates an investor or lender for losses in the event of borrower default on a mortgage loan. In other words, mortgage insurance protects the lender if you fall behind on your payments.
Read MoreMortgage insurance is a type of insurance policy that covers the lender in case the borrower defaults on the loan. It is usually required in the form of private mortgage insurance (PMI) when borrowers don’t make a down payment of at least 20% on most conventional loans. For FHA loans, it’s called a mandatory mortgage insurance premium (MIP). If you fit into either of those categories, then mortgage insurance is something you’ll have to deal with.
Read MoreTaking on a loan with PMI can often increase the amount of options you have, meaning that you may be able to take on a larger or riskier loan than you would regularly qualify for. Often, this means you can buy a home earlier, and start building up its equity without having to save up the full 20% of the home’s purchase price before doing so.
Read MoreIf you take out a conventional mortgage loan with a downpayment of less than 20% of the home’s purchase price, you may be required to purchase private mortgage insurance (PMI). Private mortgage insurance is a type of coverage that protects the lender in the event that the borrower defaults on a loan.
Read MoreIn 2006 to 2016 homeowners were in fact able to deduct mortgage insurance premiums per the Protecting Americans from Tax Hikes (PATH) Act. Congress must directly approve this deduction every year following 2016.
Read MoreWhat is a mortgage insurance premium? A mortgage insurance premium (MIP) is an insurance plan implemented in FHA loans regardless of the down payment amount you put down on the loan. The MIP is paid directly to the Federal Housing Administration (FHA) instead of a private company as Private Mortgage Insurance (PMI) is.
Read MoreLenders want to know they'll get their money back when they lend it out. In the event that a borrower can’t produce at least 20% down for a traditional loan, lenders will impose mortgage insurance on the borrower in order to protect the lender in default. Lenders turn to private insurance providers for this, hence the name -- Private Mortgage Insurance (PMI).
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