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Summary: Private mortgage insurance is added onto a loan when the borrower cannot provide a 20-percent down payment, as the lender takes a higher risk in this situation. Pay private mortgage insurance when making a small down payment with tips from a mortgage broker in this free video on mortgage loans.
Matthew McKillen brings 21 years of industry experience in arranging loans for his clients. He has worked in financial services senior management positions in mortgage banking...read more
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"Hi this is Matt McKillen with Innovative Financial Group. The question posed to me today is what is private mortgage insurance? Private mortgage insurance is a insurance policy or premium that's included in your loan whenever you refinance or purchase a home with less than 20% down. For example if you buy a house and you're only putting 5% down, your PMI payment or your private mortgage insurance payment will be included in your escrow because the bank's taking a higher risk by lending you that mortgage with not 20% down. The less you put down the higher the PMI insurance payment is. For example if you put 10 or 15% down, the PMI payment in your escrow would actually be quite less. So what it is it's an insurance policy that covers the bank in the event of a loss on your loan for that additional amount they advanced over the traditional 80% LTV. Again my name is Matt McKillen, I'm with Innovative Financial Group."
eHow Article: What Is Private Mortgage Insurance?
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