A policy that guarantees repayment to a lender of a mortgage loan in the event of default. See "insured mortgage;" "FHA;" "VA;" "FmHA;" "private mortgage insurance."
Money paid to insure the lender against loss due to foreclosure or loan default. Mortgage insurance is required on conventional loans with less than a 20 percent down payment. FHA mortgage insurance requires a payment of 1.5 percent of the loan amount to be paid at closing, as well as an annual fee of 0.5 percent of the loan amount added to each monthly payment.
A policy that protects lenders against some or most of the losses that can occur when a borrower defaults on a mortgage loan; mortgage insurance is required primarily for borrowers with a down payment of less than 20% of the home's purchase price. Insurance purchased by the buyer to protect the lender in the event of default. Typically purchased for loans with less than 20 percent down payment. The cost of mortgage insurance is usually added to the monthly payment. Mortgage insurance is maintained on conventional loans until the outstanding amount of the loan is less than 80 percent of the value of the house or for a set period of time (7 years is common). Mortgage insurance also is available through a government agency, such as the Federal Housing Administration (FHA) or through companies (Private Mortgage Insurance or PMI).
- Browse Related Terms: 203(b), Federal Housing Administration (FHA), FHA, Insured mortgage, Mortgage Insurance, Mortgage Insurance (MI), Mortgage insurance company, Mortgage Insurance Premium (MIP), PMI, Private mortgage insurance, Private Mortgage Insurance (PMI)