Question:

What is the private mortgage insurance coverage?

Answer:

The common private mortgage insurance coverage protects the top 20% of the loan to lenders. In comparison, government insured loans are secured 100%.

Private Mortgage Insurance Features

With private mortgage insurance coverage, lenders protect themselves from home value depreciation and foreclosure. This is also the reason lenders require the 20% down payment - they simply want their loans to be secured with some equity. If the borrower cannot come up with 20% equity, they need the PMI to kick in.

Private mortgage insurance coverage is not to be mistaken with homeowners insurance, or with mortgage life insurance. The private mortgage insurance does protect the lender only; the homeowners or hazard insurance and mortgage life insurance are designed to protect the borrower.

First-time homebuyers benefit with the private mortgage insurance coverage as they often cannot come up with the down payment.

Recommended helpful present and future homeowners links:
Why: Refinance to a fixed rate loan while mortgage rates are still low.
Link:
Why: Because FHA loans are insured by the US Federal Government they have very competitive interest rates and are easier to qualify.
Link:
Why: Know and protect your credit report and score.
Link: See All 3 National Credit Scores & 3 Reports Instantly, Online & Free
Why: Find your next home and save money.
Link: Search thousands of foreclosures. Free 7-day trial.
Link this QnA Print del.icio.us Digg
Was this Mortgage QnA helpful?
Not at all
  • Currently 3.1/5 Stars
  • 1
  • 2
  • 3
  • 4
  • 5
 Definitely
Add to this Answer

Mortgage QnA is not a common forum. We have special rules:

  • Post no questions here. To ask a question, click the Ask a Question link
  • We will not publish answers that include any form of advertising
  • Add your answer only if it will contrubute to the quality of this Mortgage QnA and help future readers
If you have trouble reading the code, click on the code itself to generate a new random code. Verification Code Above:
Bookmark and share this QnA:

Common misspellings: mortage and morgage