Definition of Mortgage Insurance:
Mortgage Insurance - PMI in Orange County (Public and Private):
There is both private and public mortgage insurance. Both types of insurance protect the mortgage lender against loss if a borrower defaults on their mortgage. Private mortgage insurance (PMI) is required for borrowers of conventional loans (Fannie Mae and Freddie Mac) with a down payment of less than 20% - The borrowers can petition the lender to remove the PMI once the loan-to-value has dropped to less than 80%. FHA loans and VA loans are essentially public mortgage insurance as borrowers pay higher insurance premiums in exchange for a low down-payment. These funds allow the FHA to insure lenders against losses if borrowers default on FHA-approved loans. Insurance costs will be included as part of the monthly loan payment. FHA-insured loans have two mortgage insurance components – an up-front mortgage insurance premium (UFMI) and a monthly mortgage insurance payment. The upfront payment is a one-time premium, currently 1.75% of the loan, and is paid at closing or may be financed into monthly payments. Borrowers pay a monthly mortgage insurance payment until they reach 78% loan to value from the original purchase price of the home.