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Payment Protection Insurance

Aug 7, 2008
What is PMI and why is it required? Private mortgage insurance (PMI) is insurance written by a private company that protects the lender from losses in the event the borrower defaults on the mortgage. Borrowers are required to pay the premium for private mortgage insurance. Private mortgage insurance limits a lender's exposure to financial loss resulting from loan default. If you make a down payment of less than 20% even if you have a good credit profile, lenders generally require private mortgage insurance.The lender does, although they will generally pass that cost on to the borrower.

Can I pay my own insurance? If you have a VA, FHA or conventional loan with Private Mortgage Insurance, your insurance premium must be collected.FHA MIP (Mortgage Insurance Premium) is a fee collected in connection with an FHA loan. For 30 year loans, the fee is 1.5% upfront, which is added to the mortgage amount. There is also a monthly mortgage insurance premium. For 30 year loans the monthly premium is .50% of the base loan amount (before the upfront MIP is added). This is added to the mortgage payment.A high-ratio mortgage is one where the amount to be borrowed is greater than 75% of the purchase price or appraised value. High-ratio mortgages generally require mortgage loan insurance provided by CMHC, Genworth, and AIG United Guaranty..

How long is this going to last? long as people are buying homes through FHA loans and paying the mortgage insurance premium there will be people due this refund, so you can do this for many years to come.

Q - What is meant by mortgage insurance premium? A - The mortgage insurance premium or mortgage loan insurance as it is better known is provided by Canada Mortgage and Housing Corporation (CMHC), a crown corporation, and GE Capital Mortgage Insurance Company, an approved private corporation. New players such as AIG United Guarantee Insurance Corporation have just entered the market and as time goes on it is likely that we will see more options.For conventional mortgages, you need a down payment of at least 20% of the purchase price of a home. You can also get a mortgage with a down payment as low as 5%, but you must insure the mortgage against default. The insurance premium would be included in your regular mortgage payment.This is a conventional loan that basically does away with a monthly mortgage insurance premium.

How much can I borrow? You can borrow up to 95% of the value of your property. You may need to pay a one-off premium for Lenders Mortgage Insurance if your loan amount is more than 80% of the value of your property. To get a better idea of how much you can borrow, use our How Much Can I Borrow Calculator or call us on 1800 198 978.When you sign up for coverage, your premium will be added to your mortgage statement and identified as optional insurance coverage. The premium will be conveniently collected with your monthly mortgage payment.Mortgage insurance protects the lender against default by the buyer. This enables the lender to make a loan, which the lender considers a higher risk.

How much do I need for a down payment? For conventional mortgages, you need a down payment of at least 20% of the purchase price of a home. You can also get a mortgage with a down payment as low as 5%, but you must insure the mortgage against default. The insurance premium would be included in your regular mortgage payment.Private mortgage insurance (PMI) is insurance written by a private company that protects the lender from losses in the event the borrower defaults on the mortgage.
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