Definition of Private Mortgage Insurance (PMI):
PMI In Orange County:
There is both private and public mortgage insurance. Both types of insurance protect the mortgage lender against loss if a borrower defaults on his loan. Private mortgage insurance (PMI) is required for borrowers of conventional loans (Fannie Mae and Freddie Mac) with a down payment of less than 20% (LTV greater than 80%). FHA loans are 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. The FHA does not make loans, they insure mortgage loans.