Do I need Private Mortgage Insurance?

Let's start with what mortgage insurance is. It's an insurance policy the lender takes out against your loan to protect them against losses in the even that you default on your loan; you can also think of it as gap insurance. Mortgage Insurance is required whenever you have less than 20% equity, or downpayment, in the property. Even though Private Mortgage Insurance is specific to Conventional Loans. But, you can still have mortgage insurance on a government loan like FHA; if you take out a 30 year fixed FHA loan, you'll be required to carry mortgage insurance for a minimum of 5 years regardless of equity position. Why would you want it? Usually, it has more to do with need, since a large down payment isn't a reality for most first time home buyers. Yes, it can be expensive, but then again, it's all relative. Personally, I don't think there's anything wrong with mortgage insurance when you consider that we wouldn't have low down payment loans without it.

You don't want. You may have to have it. FHA requires it on all 30 year fixed loans. Traditional lenders require it with less than 20% down payment. ... Happy funding, Rudi

Jane, I am a Orange County based lender, please feel free to call or email me so i could explain to you in detail as what other options you have available. Houtan Hormozian - Houtan.Hormozian@Crestico.com / 949-242-5215