a number of ways for borrowers to avoid or reduce the amount of mortgage insurance typically required when obtaining a mortgage. First let's look at what mortgage insurance is Willian Chelsea Jersey , what it does and does not do. Mortgage Insurance covers the mortgage lender against loss caused by a mortgagor's default. It may cover all or part of the loss and it may or may not relieve any liability on the borrowers part if default on the mortgage occurs.


Private mortgage insurance was developed to help borrowers purchase a home without putting 20% down as was required by banks and lenders many years ago. I like to think of it as a "hired co-borrower". Different types of loans refer to it in different ways, and some loans have different requirements for the amount of coverage needed Victor Moses Chelsea Jersey , but it essentially serves the same purpose. It helps protect the lender. Not all loans require mortgage insurance and the premium varies due to different criteria.


Conventional Mortgages


When the loan to value for an owner?occupied residence is more than 80% (or the borrower is putting less than 20% down) then Private Mortgage Insurance (or PMI), is typically required. The premium may be paid on an annual Tiemoue Bakayoko Chelsea Jersey , monthly or single premium plan. (The most popular method of payment is the monthly method). The premiums are based on the amount and terms of the loan and may vary according to the loan-to-value, type of loan Thibaut Courtois Chelsea Jersey , term of loan and the amount of coverage required by the lender. The less the borrower puts down the higher the premium. PMI may be waived when the loan reaches 80% or less of the value of the property. VA Mortgages


A VA loan is guaranteed by the Veterans Administration (VA) and the lender is required to collect an up-front one-time fee at closing called the "Funding Fee". This amount is between .50% and 3.00% of the loan amount depending upon the status of the Veteran and if the Veteran has used his VA Benefits previously to purchase a home. There is no monthly premium and there is no refund of the Funding Fee when the loan'to-value is reduced below 80% or if the loan is paid off early.


FHA Mortgages


Regardless of the amount of the down payment, FHA requires a one time upfront fee of 2.25% (this may change from time to time)of the loan amount which Ruben Loftus-Cheek Chelsea Jersey , may be financed in with the loan. In addition to the upfront fee there is a yearly fee of .50% of the unpaid balance of the loan which is divided into 12 equal payments and paid monthly in the house payment. If the loan is paid in full within the first 7 years there may be a prorated refund of the upfront premium paid. The monthly mortgage insurance premium may not be waived regardless of the loan to value.