What is Mortgage Insurance (MI or PMI)?
Mortgage Insurance, also known as MI or PMI, is an insurance premium required on most loans with a down payment of less than 20%…in other words, a single mortgage loan that exceeds 80% of the sale price. This type of insurance protects the lender a gainst losses resulting from the default of a mortgage loan by the borrower. Many programs have been introduced in recent years that allow borrowers to put as little as 0% down, and still avoid mortgage insurance. Many of these loans are referred to as combo or “piggy-back” loan, where 2 seperate loans are combined to mirroe the sale price of the home. Typically the cominations are 80% / 20% loans, or 75% / 25% loans. In either example, the 1st mortgage loan maount does not exceed the 80% threshhold in which MI or PMI would normally be required.
