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How can individuals save on mortgage insurance?

When you decide to purchase a home, you need to remember that when being a homeowner, you must also purchase mortgage insurance. Private mortgage insurance is commonly referred to as PMI. PMI is an insurance policy that protects your mortgage lender from any loss. The loss being missing payments on your mortgage. PMI is there, to ensure that your lenderu2019s investment in your home is shielded.

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How can individuals save on mortgage insurance?

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  1. How can individuals save on mortgage insurance? When you decide to purchase a home, you need to remember that when being a homeowner, you must also purchase mortgage insurance. Private mortgage insurance is commonly referred to as PMI. PMI is an insurance policy that protects your mortgage lender from any loss. The loss being missing payments on your mortgage. PMI is there, to ensure that your lender’s investment in your home is shielded. The most important thing to remember is that mortgage insurance is not the homeowners’ insurance. Homeowners insurance is a policy designed to protect your home and personal belongings from damage or destruction. So, how does mortgage insurance work? How does mortgage insurance work? As we touched base above, mortgage insurance is to cover the lender, but you pay the payment. The payment is a portion of the principal in the event you stop making payments. However, insurance does not save you from losing your home if you can not make payments. If you fall too behind on payments you can most definitely lose your home in foreclosure. Mortgage insurance gives lenders the confidence to approve mortgages for people with lower credit scores or smaller down payments. Because of mortgage insurance, there are more loan options. Different Loan options:

  2. Because Mortgage insurance motivates lenders to give out home loans, they also have expanded on the different loan options but with different types of mortgage insurance. Mortgage insurance works a little differently depending on the type of home loan. Here’s a look at the coverage for conventional and government-backed mortgages. ● Conventional mortgages: For a conventional loan with low down payment requirements, PMI is required. FHA: FHA home loans require an upfront mortgage insurance premium (MIP) and an annual premium, regardless of the down payment amount. USDA: USDA loans charge for mortgage insurance via two fees; an upfront guarantee fee you pay once and an annual fee you pay every year for the life of the loan. VA: VA loans do not require a mortgage insurance, but most borrowers will pay a “funding fee”. ● ● ● How to save on mortgage insurance: There are actually a couple different ways you can save on your mortgage insurance. -Put more money down. -Improve your credit score. -Refinance your house. -Make extra payments. By making one or two or all of these changes listed above, your mortgage insurance will decrease. For more ways to save, talk to your Utah loan officer with Graystone Mortgage.

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