Statistics suggest that 75% of all people with residential mortgages are paying mortgage insurance (MI or PMI)- and many of those same people aren’t sure what mortgage insurance is or why they are paying it each and every month…95% of PMI policy holders overpay for PMI insurance by $114 million a month.”  Are you one of them?… What Homeowners and Home Buyers Don’t Know Can Cost them BIG $ Mortgage Insurance (PMI) is an insurance premium that is taken out by a mortgage company to protect “the lender” in the event of foreclosure (this has nothing to do with protecting the borrower- YOU).

When a borrower purchases a home, a lender in most cases includes mortgage insurance, also called Private Mortgage  Insurance (PMI), to the monthly payment.  This is commonly done unless a down payment of at least 20% is made- or unless a home buyer is savvy about available loan programs. The private mortgage insurance (PMI) payment is based on the original mortgage amount and is paid as part of the monthly mortgage payment until a borrower 1- requests it’s removal and the lender accepts the borrower’s proof of value and 2- has an appraisal that shows that home has increased in value, including improvements to the point that the loan is 80% of the current house value.

Even more misleading are the FHA loans and FHA loan programs.  An FHA loan is not a government loan, it is a government INSURED loan.  An FHA loan is a loan made by a qualified lender and it is insured by the Federal Housing Administration (FHA).  Many lenders lead unsuspecting potential home buyers into thinking that and FHA loan is a special government sponsored program.  The fact of the matter is that FHA loans are in many cases a bigger cost and money trap to home buyers than conventional mortgage financing.