Lenders mortgage insurance ( LMI ), also known as private mortgage insurance ( PMI ) in the US, is a mortgage insurance mortgage loan . It is insurance to offset losses in the case where a mortgagor is not able to repay the loan and the lender is not able to recover its costs after foreclosure and sale of the mortgaged property. [1] Typical rates are $ 55 / mo. Per $ 100,000 financed, or as high as $ 125 / mo. For a typical $ 200,000 loan. [2]

Mortgage insurance in the US

The annual cost of PMI varies and is expressed in terms of the total loan value in most cases, depending on the loan term, loan type, proportion of the total Monthly, annual, or single). The PMI may be payable up front, or it may be capitalized on the loan in the case of single premium product. This type of insurance is usually less than 1% of the total value of the loan . Once the principal is reduced to 80% of value, the PMI is often no longer required on conventional loans. This can happen via the main being paid down, via home value appreciation, or both. FHA loans often require refinancing to remove PMI, even after the LTV drops below 80%. The PMI can be substantial. In the case of lender-paid MI, the term of the policy can vary based on the type of coverage provided. Borrowers typically have no knowledge of any lender-paid MI, in fact most “MI Required” loans actually have lender-paid MI, which is funded through a higher interest rate that the borrower countries.

Sometimes lenders will require that LMI be paid for a fixed period (for example, 2 or 3 years), even if the main reaches 80% sooner than that. Legally, there is no obligation to allow the cancellation of MI until the loan has amortized to a 78% LTV ratio (based on the original purchase price). The cancellation request must come from the Servicer of the mortgage to the PMI company who issued the insurance. Often the Servicer will require a new appraisal to determine the LTV. The cost of mortgage insurance, which includes loan, LTV, occupancy (primary, second home, investment property), documentation provided at loan origination, and most of all, credit score .

If you are looking for a mortgage loan for a mortgage loan, you may want to make a mortgage loan to make up the difference. [3] Two popular versions of this lending technique are the so-called 80/10/10 and 80/15/5 arrangements. Both involve obtaining a primary mortgage for 80% LTV. LTV second mortgage with a 10% downpayment, and an 80/15/5 program uses a 15% LTV second mortgage with a 5% downpayment. Other combinations of second mortgage and downpayment could also be available. United States tax law, mortgage interest payments may be deductible on the borrower’s income taxes,

LMI / PMI tax deduction

Mortgage insurance was tax deductible in 2007 in the US. [4] For some homeowners, the new law made it cheaper to get mortgage insurance than to get a ‘piggyback’ loan. The MI tax deductibility provision passed in 2006 provides for an itemized deduction for the cost of private mortgage insurance for homeowners earning up to $ 109,000 annually. [4]

Deduction, effective for mortgage contracts issued after December 31, 2006, and before January 1, 2010. The legislation. [4]

Mortgage insurance in Australia

The two main mortgage insurers in Australia are Genworth Financial and QBE LMI. Mortgage insurance is payable if the loan-to-value ratio (LTV, or LVR in Australia) is above 80%, or above 60% for low document loans. Some non-bank lenders get mortgage insurance for every loan irrespective of the LVR.

LMI premiums are calculated based on the loan amount and LVR. State government stamp duty may be payable on the premium. The premium can often be capitalized on top of the loan amount free of charge. Unlike in other countries, the LMI is a premium in Australia.

Many of the larger Australian lenders have the ability to self-approve mortgage lenders in order to directly apply to their insurer. This is known as a Delegated Underwriting Authority (DUA).

Mortgage insurance in Canada

The LTV is more than 80%. The LTV is more than 80%. [5] The Mortgage and Housing Corporation is between 1% (for 80% LTV) and 2.75% (for 95% LTV) of the principal loan. [6]

See also

  • Mortgage insurance
  • Credit default swap

References

  1. Jump up^ Canada Mortgage and Housing Corporation. “Who Needs Mortgage Loan Insurance?” .
  2. Jump up^ “Cost of Private Mortgage Insurance” .
  3. Jump up^ Max, Sarah (2003-12-23). “Buying a home with little down” . CNNMoney.com.
  4. ^ Jump up to:c Lewis, Holden (2006-12-16). “In 2007, mortgage insurance will be tax-deductible” . Seattle Post-Intelligencer.
  5. Jump up^ “CMHC Who needs loan mortgage insurance?” . 2011-11-13.
  6. Jump up^ “CMHC Mortgage Loan Insurance Cost” . 2011-11-13.