Private mortgage insurance companies

Aug. 23, 2011 - PRLog -- In the mortgage lending heyday, lenders would bend over backwards to help borrowers avoid PMI. Now, it turns out, that was a bad idea. Lenders, struggling with too many defaults already, have a renewed interest in requiring you to maintain a mortgage insurance policy.

This means that you need to know what PMI is, and the impact it has on your home purchase or refinancing plans. Mortgage insurance protects your lender in case you default on your mortgage loan. This protection is in addition to the protection gained when the lender takes a security interest in your home. Lenders face the most risk when there isn't a sufficient cushion between the home's value and the outstanding loan amount.  When this cushion is too small or even negative, lenders aren't able to recoup their funds after absorbing the costs of foreclosure. For this reason, they require PMI when your loan balance exceeds 80 percent of the home's appraised value.

If your lender requires you to carry mortgage insurance, you'll have to pick up the tab. The premiums will be added to your monthly mortgage payment, which limits your home-buying budget or reduces your savings when you're refinancing to a lower rate.

http://www.privatemi.com/

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