{"id":12535,"date":"2010-03-28T11:22:24","date_gmt":"2010-03-28T17:22:24","guid":{"rendered":"http:\/\/template.lenderama.com\/?p=647"},"modified":"2010-03-28T11:22:24","modified_gmt":"2010-03-28T17:22:24","slug":"why-do-i-need-mortgage-insurance","status":"publish","type":"post","link":"https:\/\/dev203k.orbitwebx.com\/dev203k\/why-do-i-need-mortgage-insurance\/","title":{"rendered":"Why Do I Need Mortgage Insurance?"},"content":{"rendered":"<p>You might find yourself asking, <em>Why Do I Need Mortgage Insurance?\u00a0 <\/em>This is a great question&#8230;<\/p>\n<p>Mortgage Insurance, sometimes referred to as Private Mortgage Insurance, is required by lenders on <a href=\"\/loan-programs\/conventional-home-loans\/\">conventional home loans<\/a> if the borrower is financing more than 80% <a href=\"\/calculating-loan-to-value-ltv\/\">Loan-To-Value<\/a>.<\/p>\n<p>According to <a href=\"http:\/\/en.wikipedia.org\/wiki\/Private_mortgage_insurance\" target=\"_blank\" rel=\"noopener\">Wikipedia<\/a>:<\/p>\n<blockquote><p><strong>Private Mortgage Insurance<\/strong> (PMI) is insurance payable to a lender or trustee for a pool of securities that may be required when taking out a mortgage loan.<\/p>\n<p>It is insurance to offset losses in the case where a mortgagor is not able to repay the loan and the lender is not able to recover its costs after foreclosure and sale of the mortgaged property.<\/p><\/blockquote>\n<p>PMI isn&#8217;t necessarily a bad thing since it allows borrowers to purchase a property by qualifying for conventional financing with a lower down payment.<\/p>\n<p>Private Mortgage Insurance (PMI) simply protects your lender against non-payment should you default on your loan.<\/p>\n<p>It&#8217;s important to understand that the primary and only real purpose for mortgage insurance is to protect your lender\u2014not you.<\/p>\n<p>As the buyer of this coverage, you&#8217;re paying the premiums so that your lender is protected. PMI is often required by lenders due to the higher level of default risk that&#8217;s associated with low down payment loans.<\/p>\n<p>Consequently, it&#8217;s sole and only benefit to you is a l<a href=\"\/calculating-loan-to-value-ltv\/\">ower down payment mortgage<\/a><\/p>\n<p><strong>Private Mortgage Insurance and Mortgage Protection Insurance<\/strong><\/p>\n<p>Private mortgage insurance and mortgage protection insurance are often confused.<\/p>\n<p>Though they sound similar, they&#8217;re two totally different types of insurance products that should never be construed as substitutes for each other.<\/p>\n<ul>\n<li>Mortgage protection insurance is essentially a life insurance policy designed to pay off your mortgage in the event of your death.<\/li>\n<\/ul>\n<ul>\n<li>Private mortgage insurance protects your lender, allowing you to finance a home with a smaller down-payment.<\/li>\n<\/ul>\n<p><strong>Automatic Termination<\/strong><\/p>\n<p>Thanks to The Homeowner&#8217;s Protection Act (HPA) of 1998, borrowers have the right to request private mortgage insurance cancellation when they reach a 20 percent equity in their mortgage. What&#8217;s more, lenders are required to automatically cancel PMI coverage when a 78 percent <a href=\"\/calculating-loan-to-value-ltv\/\">Loan-to-Value<\/a> is reached.<\/p>\n<p>Some exceptions to these provisions, such as liens on property or not keeping up with payments, may require further PMI coverage.<\/p>\n<p>Also, in many instances your PMI premium is often tax deductible in a similar fashion as the interest paid each year on your new mortgage is tax deductible. Please, check with a tax expert to learn your tax options.<\/p>\n<p style=\"text-align: center;\"><span style=\"color: #c0c0c0;\">_________________________________<\/span><\/p>\n<h2>Related Articles &#8211; Mortgage Payments:<\/h2>\n<ul>\n<li><a href=\"\/mortgage-101\/mortgage-payments\/\"><strong>Mortgage Payment Basics<\/strong><\/a><\/li>\n<li><strong><a href=\"\/who-owns-my-home-if-i-have-a-mortgage\/\">Who Owns My Home If I Have A Mortgage?<\/a><\/strong><\/li>\n<li><strong><a href=\"\/how-do-i-calculate-my-mortgage-payment-without-using-a-mortgage-calculator\/\">How Do I Calculate My Mortgage Payment Without A Calculator?<\/a><\/strong><\/li>\n<li><strong><a href=\"\/understanding-an-amortization-chart\/\">Understanding An Amortization Schedule<\/a><\/strong><\/li>\n<li><strong><a href=\"\/shopping-for-a-hazard-insurance-policy\/\">Shopping For A Hazard Insurance Policy<\/a><\/strong><\/li>\n<li><strong><a href=\"\/understanding-the-fha-mortgage-insurance-premium-mip\/\">Understanding the FHA Mortgage Insurance Premium (MIP)<\/a><\/strong><\/li>\n<li><strong><a href=\"\/do-i-have-to-continue-making-my-mortgage-payment-if-my-lender-goes-bankrupt\/\">Do I Have To Continue Making My Mortgage Payment If My Lender Goes Bankrupt?<\/a><\/strong><\/li>\n<\/ul>\n","protected":false},"excerpt":{"rendered":"<p>Mortgage Insurance, sometimes referred to as Private Mortgage Insurance, is required by lenders on conventional home loans if the borrower is financing more than 80% Loan-To-Value.<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[58],"tags":[104],"class_list":["post-12535","post","type-post","status-publish","format-standard","hentry","category-mortgage","tag-mortgage-insurance"],"acf":[],"yoast_head":"<!-- This site is optimized 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