Written by Robert H. Ruth
Last week, in part 1 of this topic, I explained that the purpose of PMI is to offset the additional risk faced by the lender in giving a loan to a borrower when they purchase a property with less than 20% down.
In that post, I explained the basics of Borrower Paid Mortgage Insurance (BPMI), which is the most widely used type of Private Mortgage Insurance.
- My comparison showed that the expense of PMI is completely driven by the amount of down payment a borrower can make and their credit score.
- I also explained that a borrower would pay the PMI until they reach a 20% equity position based upon the initial amortization schedule of their loan or,
- The BPMI will terminate automatically when the loan gets to 78%