NLIC.org

Sandra Said:

PMI insurance pre-paid?

We Answered:

When you buy a house, and have an escrow account, you pay all the first year fees UP FRONT - PMI, insurance, taxes. BUT, a part of each monthly payment goes into the escrow account, and after the first year, your mortgage company pays PMI, insurance, taxes.

So yes. You paid it up front. They pay it now. PMI isn't a "once and done" thing. You pay it EVERY YEAR, just like with property taxes, just like with homeowners insurance. So you didn't pay "in full", you only paid for the first year.

Samantha Said:

Hello, is there any way to lower my PMI insurance without refinancing? ?

We Answered:

nope

Yolanda Said:

What is the difference between PMI and an 80/20 loan?

We Answered:

Okay, first of all, the PMI is insurance that protects the lender from you walking away. Whether or not this is required is based on the Loan to Value ratio. The more of the home's value you borrow, the more likely the bank is to get hurt if you bail, so they usually want PMI if you go over 80. That's why the 80/20 loans were devised.

One thing you have to consider on an 80/20 is that the 20% loan is usually at a higher rate, like up to a full percentage, and they usually have a "balloon" meaning you pay as if it were a thirty year loan, but it's all due in fifteen. That scares some people.

Now, there are a lot of other factors that can make the difference in payments besides PMI and loan value.

Taxes may be different, and so might insurance. There's also the term of the loan, and the interest rate.

Why can't they get an 80/20? Well, could be credit scores, could be the appraised value of the house. Could be that they don't want two payments. Maybe the balloon scared them off. Maybe the interest rates were so much higher.

Remember also that PMI isn't a permanent part of the payment. After a year or two, if they've paid diligently, and the appraised value is high enough above the loan, they will stop charging PMI... on request, of course, so the homeowner has to do something about it.

Jeanette Said:

PMI Insurance going up due to refinance?

We Answered:

Run, don't walk, away from this mortgage broker. If you are interested in refinancing, do it directly through your lender.