What Is Private Mortgage Insurance? | Andrew Hutchings | Long Beach, California

  • Borrower-Paid Mortgage Insurance (BPMI): The most common type of PMI. BPMI Requires the buyer to pay an additional monthly fee. Owners will have to pay this insurance until their loan-to-value ratio hits twenty-two percent.
  • Single-Premium Mortgage Insurance (SPMI) is also known as single-payment mortgage insurance. Owners pay a lump sum upfront, usually during or around the closing. Generally, this amount will be less than what is generated by BPMI.
  • Lender-Paid Mortgage Insurance (LPMI): This type gives the appearance of the lender paying the insurance when it is calculated into the cost of paying back the loan. Unlike BPMI, the extra cost in payment will not go away when hitting a certain percentage.
  • Split-Premium Mortgage Insurance: This one combines the features of BPMI and SPMI into one bundle. Owners pay a lump sum at the beginning (closing) and then smaller amounts on a monthly basis.
  • Federal Home Loan Mortgage Protection (MIP): Finally, MIP can only be applied to loans underwritten by the Federal Housing Administration. All FHA loans with less than ten percent downpayment require this protection.

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