Lender-Paid Private Mortgage Insurance

AAA

DEFINITION of 'Lender-Paid Private Mortgage Insurance'

Private mortgage insurance that a mortgage lender pays on behalf of a borrower. Mortgage lenders generally require private mortgage insurance if a mortgage has a loan to value (LTV) ratio of more than 80%. When a lender pays the private mortgage insurance on behalf of the borrower, they do so in exchange for charging the borrower a higher interest rate. In other words, the borrower still pays for the private mortgage insurance, but does so in the form of a higher interest rate.

INVESTOPEDIA EXPLAINS 'Lender-Paid Private Mortgage Insurance'

The economics of the choice between paying private mortgage insurance, choosing lender paid private mortgage insurance, or using a second mortgage to avoid private mortgage insurance altogether is a function of how long borrowers estimates they will remain in a home or how long before they might refinance their mortgages and how quickly they estimate their home will appreciate.

To learn more about lender-paid private mortgage insurance, check out Why do I need to pay private mortgage insurance (PMI)?

RELATED TERMS
  1. Private Mortgage Insurance - PMI

    A policy provided by private mortgage insurers to protect lenders ...
  2. Mortgage

    A debt instrument, secured by the collateral of specified real ...
  3. Forced Place Insurance

    The insurance that a lien holder places on a property, to provide ...
  4. Mortgage Insurance

    An insurance policy that protects a mortgage lender or title ...
  5. Up-Front Mortgage Insurance - UFMI

    An insurance premium that is collected, typically on Federal ...
  6. 80-10-10 Mortgage

    A mortgage transaction in which a first and second mortgage are ...
Related Articles
  1. 4 Steps To Attaining A Mortgage
    Credit & Loans

    4 Steps To Attaining A Mortgage

  2. How Mortgage Refinancing Affects Your ...
    Credit & Loans

    How Mortgage Refinancing Affects Your ...

  3. Understanding Your Mortgage
    Personal Finance

    Understanding Your Mortgage

  4. Understanding The Mortgage Payment Structure
    Credit & Loans

    Understanding The Mortgage Payment Structure

comments powered by Disqus
Hot Definitions
  1. Days Sales Of Inventory - DSI

    A financial measure of a company's performance that gives investors an idea of how long it takes a company to turn its inventory ...
  2. Accounts Payable - AP

    An accounting entry that represents an entity's obligation to pay off a short-term debt to its creditors. The accounts payable ...
  3. Ratio Analysis

    Quantitative analysis of information contained in a company’s financial statements. Ratio analysis is based on line items ...
  4. Days Payable Outstanding - DPO

    A company's average payable period. Calculated as: ending accounts payable / (cost of sales/number of days).
  5. Net Sales

    The amount of sales generated by a company after the deduction of returns, allowances for damaged or missing goods and any ...
  6. Over The Counter

    A security traded in some context other than on a formal exchange such as the NYSE, TSX, AMEX, etc. The phrase "over-the-counter" ...
Trading Center