Lenders Mortgage Insurance (LMI), also known as Private mortgage insurance (PMI) in the US, is insurance payable to a lender or trustee for a pool of securities that may be required when taking out a mortgage loan. It is insurance to offset losses in the case where a mortgagor is not able to repay the loan and the lender is not able to recover its costs after foreclosure and sale of the mortgaged property.[1] Typical rates are $55/mo. per $100,000 financed[2], or as high as $1,500/yr. for a typical $200,000 loan[3].
Mortgage insurance is basically the same as a type of life insurance you usually take a policy out in for the sum of whats outstanding on the mortgage and incase of your death the policy pays out to the mortgage company to pay off the mortgage. They are expensive through the lender yes as someone mentioned. But I think its compulsory to have a policy in place before you can get started on a mortgage.
mortgage insurance is a ripoff. If a spouse dies or you both die, the house gets paid by that insurance. But you pay premiums on it, so the longer you have it, the less it is worth. Just get term or whole life insurance that will cover the mortgage amount and then some, it will be cheaper for you and you will have some investment if you go whole. PMI is just insurance for the bank in case you default and it is resold. Doesn't really help you but it is required until you pay off 20% of your loaned amount.
Actually there are two kinds....There is the kind you must buy if your loan is not standard that is to say a 20% down loan. That kind protects lenders if you default.....the other type is rather sneaky. This is insurance sold to pay off your loan if you die. If you buy it through the lender it is terribly expensive...You could go to an independent insurance broker and buy level premium term for the amount of your loan and save tons and tons of money.
PMI the kind you must buy is required the other kind is an option but never buy through your lender or never buy it if it is called "mortgage' insurance...just buy level premium term.
Mortgage insurance protects the lender, not you. If you cannot make the payments, your credit will suffer even if you have mortgage insurance.
Wiki has a pretty comprehensive page on mortgage insurance:
http://en.wikipedia.org/wiki/Mortgage_in…
PMI is like throwing money away.
It is not tax deductible, and it does not apply towards principal or interest.
Please put 20% down, and stop making banks filthy rich.
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PMI? It is insurance in case you do not make your payments.
You might repost your question under "real estate".