What do I need to know about Mortgage Insurance?
Mortgage Insurance - what's that all about?
Mortgage Insurance (MI) is typically required to purchase a home with a Loan-To-Value (LTV) ratio greater than 80%. In other words, MI is required when a borrower’s down payment or equity position is less than 20%. MI provides lenders with protection against loss in case the borrower defaults on the loan.
MI can be paid in a few different ways:
- Up front at closing - paid by the lender
- Up front at closing - paid by the borrower
- Included in your monthly mortgage payment
- A combination of these — a portion can be paid up front at closing and the rest of paid as a part of the mortgage payment
There are different types of MI, each of which comes with benefits and drawbacks. Be sure to talk to your Loan Officer to see which type of MI will work best for you:
Lender Paid Mortgage Insurance (LPMI)
LPMI is paid for by your lender. This option reduces your monthly mortgage payments, but you will have a higher interest rate. It cannot be cancelled and will be included in your mortgage payment for the life of the loan. The only way to get rid of it is to either refinance once you have reached an LTV of 80% or pay off your mortgage completely.
Borrower Paid Mortgage Insurance (BPMI)
BPMI is paid by you, the borrower. This results in higher monthly payments at the inception of the loan. However, once you have reached 20% equity in your home, BPMI can be cancelled. Once BPMI is removed from your loan, your monthly mortgage payment will be reduced.
All loans subject to approval.
X You Are Leaving HomeStreet Bank
By choosing “click here to continue” you will be taken to a web site that is not affiliated with HomeStreet Bank and
may offer a different privacy policy and level of security. HomeStreet is not responsible for and does not endorse,
monitor or guarantee content, availability, viewpoints, products or services that are offered or expressed on other
web sites. Furthermore, products offered on other web sites may not be FDIC insured. Thank you.
You are leaving our secured site to send an email. Please be aware this email is not a secure method of communication.
Do not use email to send us confidential or sensitive information such as passwords, account numbers or social security numbers.
If you need to provide this type of information, use our secure “Contact Us” form or by phone or fax for other secure options.
Return to HomeStreet Bank Click here to continue