Private Mortgage Insurance
Educating consumers is an important part of Option One Mortgage’s
philosophy. While the world of mortgage loans can be confusing,
proactive consumers know that taking the time to learn as
much as they can about the factors that impact their financial
situation is a wise move.
Private mortgage insurance is often required by lenders when
the party who is taking out the mortgage loan does not have
a down payment in the amount of 20 percent or more of the
purchase price of the home. It is one of the reasons why,
ideally, consumers should try to save up as much as possible
for a down payment on their mortgage loan before entering
the home buying market.
However, it is not always possible to fund a large down payment,
and in such cases lending institutions still want to be able
to offer loans to these consumers. Private mortgage insurance
helps lending institutions hedge the risk that a new home
buyer will default on their loan.
Along with escrow, interest and taxes, private mortgage insurance
is one of the factors that may elevate a consumer’s
expected monthly mortgage loan payment. Consumers who have
a small or non-existent down payment should be aware that
this insurance will likely be required by their lending institution.
If you decide on a loans originated by Option One Mortgage,
your loan officer will be happy to review with you whether
or not your mortgage loan agreement requires that you have
private mortgage insurance. If so, you will be told the exact
dollar amount that this will cost.
Option One Mortgage reminds consumers that once they have
accumulated sufficient equity in their home, they will no
longer be required to carry the insurance and can at that
point eliminate that added expense from their monthly payment.