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What is private mortgage insurance and how does it affect you as a homebuyer? Today on Smart Money Questions we chat with Lindsey Johnson, president of the U.S. Mortgage Insurers, the nation’s leading private mortgage insurance association.
“At the most fundamental level, mortgage insurance is not always well known, definitely not always well understood, but it is there to help borrowers who are unable to make a 20% down payment, who are viewed by lenders as higher risk, qualify for conventional financing,” said Lindsey.
Borrowers with a conventional loan will have PMI removed once they reach 20% equity in their home, causing a reduction in their mortgage payment. Borrowers can also ask to have PMI removed earlier if their home price has appreciated enough. However, mortgage insurance for FHA loans cannot be canceled and must be paid for the life of the loan.
PMI has helped more than 33 million people have home ownership sooner than they otherwise could have, according to Lindsey. She explains why homebuyers should get quotes from multiple lenders and how to get those figures online.
For more information, visit https://www.lowdownpaymentfacts.com/ and http://www.usmi.org/.
Lindsay also talks about mortgages and real estate in the time of COVID-19 and how the pandemic may affect home buying. Listen to the full episode or click on the timestamps below to skip to a specific section.
0:29 – Meet Lindsey
1:20 – Her background
2:32 – What is private mortgage insurance and how does it work?
4:47 – Is PMI part of the complicated mortgage process?
9:37 – Does PMI automatically come off at 20%?
14:18 – Should buyers be speaking to multiple lenders?
15:49 – How will COVID-19 impact real estate, mortgage and insurance industries?
21:35 – Will rates go up as fast as they came down?
23:30 – Are any changes coming in the real estate and mortgage industry?
34:03 – Should there be underwriting metrics?
34:55 – Why does the mortgage process seem so complicated?
37:02 – Demographics, rates and inventory
39:00 – Helpful websites
“Mortgage insurance is not always well known, definitely not always well understood, but it is there to help borrowers who are unable to make a 20% down payment.”
-Lindsey Johnson
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