Mortgage insurance basics

Your borrowers scrimped, saved, searched for and found their version of the American Dream. Financing with mortgage insurance made that dream come true sooner.

Mortgage insurance is generally required on mortgages whose down payments are less than 20% of the property value. Historically, making a 20% down payment has been a difficult hurdle to clear for many homebuyers. Mortgage insurance was created to reduce that barrier and help more people afford homeownership.

By any other name...

Mortgage insurance, MI, private MI, PMI — whatever you call it, mortgage insurance is a financial guaranty that reduces the loss to the lender or investor in the event the borrowers do not repay their mortgage.

Using mortgage insurance to reduce risk enhances the quality of the mortgage as an asset. It becomes a safer investment for lenders who keep their loans in portfolio and for investors looking for secure purchases. Even if the borrowers fail to repay, the lender/investor will not suffer a complete loss, but rather, share the loss with the mortgage insurer.