Private Mortgage Insurance Myths

Reputation can be a challenging thing. I have found, through many conversations with clients over the years, that Private Mortgage Insurance (PMI) has a questionable reputation with home buyers in general and investors in particular.

However, much of its reputation is based on half-truths, bad information, lies, and myths.

In this special class, James will discuss some of the more common myths about PMI and the truth about what PMI is, and why its reputation is misguided and/or misunderstood.

In this class, James discusses:

• What is Private Mortgage Insurance (PMI) and why does it exist?
• The following myths:
• PMI is always required for down payments less than 20%.
• PMI is permanent and can never be removed.
• PMI is the same as homeowner's insurance.
• PMI protects the homeowner, not the lender.
• PMI is tax-deductible.
• PMI protects the borrower in case of job loss or disability.
• PMI is the same for all borrowers and loans.
• PMI premiums are fixed for the life of the loan.
• PMI is always monthly, always paid as a lump sum at closing, and/or always paid by the lender in exchange for a higher interest rate.
• PMI rates are set by the government.
• PMI is required for all types of loans.
• PMI is only required for first-time homebuyers.
• PMI is only required for single-family homes.
• PMI is only required by big banks.
• PMI is always cheaper than a second mortgage.
• PMI pays off my house if I die with a mortgage.
• PMI increases the monthly mortgage payment.
• PMI is a waste of money.
• Refinancing is the only way to get rid of PMI.
• Lenders benefit from PMI.
• PMI covers the full mortgage amount.
• You should always pay PMI Monthly. You should always pay PMI in a single up-front, lump-sum payment. You should always take a higher interest rate and have the lender pay PMI.
• Plus much more...

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