Question:

How much is mortgage insurance (MI)?

Answer:

Every borrower making less than 20% down payment will have to learn how much is the mortgage insurance (MI) payment. The mortgage insurance payment depends on the size of the loan and on the mortgage insurance plan.

Private mortgage insurance is used to insure around 20% of the loan amount and will therefore cost less than FHA mortgage insurance, which guarantees 100% of the mortgage to the lender.

Paying for mortgage insurance (MI) allows families with little or no funds for down payment to become homeowners. Even though the cost of mortgage insurance (MI) can seem expensive, it is offset by the fact that there are refundable mortgage insurance premium plans, or PMI can be dropped after building certain amount of equity.

Also, mortgage insurance (MI) should not be mistaken for property hazard insurance (protecting homeowners from damage on the property in case of disaster or theft), and with term life insurance plans protecting homeowners from losses in case of disability, unemployment or sickness. Private MI protects from loss only the lender.

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