Second Mortgage

You will have to have mortgage insurance if you fail to come up with a down payment that is at least 20 percent of the sale price of the home you wish to buy.

This insurance can be called by several different names such as private mortgage insurance or even simply PMI. It is called these in order for people to be able to tell that it is something different from FHA or even VA insurance. The latter couple are government sponsored programs whereas private mortgage insurance is not.

The amount of money that you have to pay towards mortgage insurance will depend mostly on the amount of money that you have borrowed and the size of the down payment that you have to put down on the house. In most cases you will be paying a half of a percent of the entire loan. Read the rest of this entry »

What is Private Mortgage Insurance? 

 Private mortgage insurance or PMI as is known is a form of insurance new homeowners are required to purchase. This is particularly so if their down payment is 20 percent or less of the property’s valued price or sale price. The main reason for private mortgage insurance is to protect lenders in the case the new homeowner defaults on their home loan.

Although private mortgage insurance has a bad reputation since it only protects lenders, it is actually a good thing. Reason is it has allowed millions of people to be able to buy homes with smaller down payments.

Previously, these people would not have been able to afford a home had the down payment remain the same. Another important reason is private mortgage insurance can help you qualify for home loans. Read the rest of this entry »

How can you get a Second Mortgage Loan to avoid Mortgage Insurance?

If you buy a house with less than 20% down or if you haven’t built up at least 20% equity before mortgage refinancing, you’ll typically have to pay private mortgage insurance (PMI). This protects the lender in case you default on the mortgage loan.

The U.S. Public Interest Group in Washington and other consumer-advocacy groups have been pressuring Congress to enact legislation that would require lenders to stop billing for PMI automatically once a borrower achieves about 20% equity. Read the rest of this entry »

Private Mortgage Insurance (PMI) helps borrowers with less than twenty percent down payment to receive mortgage financing.

Traditionally, mortgage lenders reject any mortgage application with less than twenty percent down payment. It has been proven that borrowers with less then twenty percent down payment are more likely to default on mortgage payment. The PMI protects the mortgage lenders in case of default on mortgage payment.

The mortgage lenders set the borrower with less than twenty percent down payment. In return, the borrowers pay for the PMI premiums. In the past, the borrowers pay the PMI lump sum on the closing. Over the years, the PMI is spread out to the life of the mortgage. Read the rest of this entry »