{"id":353551,"date":"2024-11-11T02:13:00","date_gmt":"2024-11-11T07:13:00","guid":{"rendered":"https:\/\/www.houzeo.com\/blog\/?p=353551"},"modified":"2025-02-11T05:53:56","modified_gmt":"2025-02-11T10:53:56","slug":"mortgage-insurance","status":"publish","type":"post","link":"https:\/\/www.houzeo.com\/blog\/mortgage-insurance\/","title":{"rendered":"What Is Mortgage Insurance and How Does It Work?"},"content":{"rendered":"\n<p class=\"highlight\">A shocking <a href=\"https:\/\/www.attomdata.com\/news\/most-recent\/mid-year-2024-foreclosure-market-report\/#:~:text=A%20total%20of%20130%2C369%20U.S.,the%20first%20half%20of%202020.\" target=\"_blank\" rel=\"noreferrer noopener nofollow\">177,431<\/a> U.S. properties faced foreclosure listings in just the first half of 2024. That\u2019s a huge number of borrowers who couldn\u2019t pay off their mortgage. But there\u2019s a solution: mortgage insurance.<\/p>\n\n\n\n<p>Over <a href=\"https:\/\/www.urban.org\/research\/publication\/mortgage-insurance-data-glance-2023\" target=\"_blank\" rel=\"noreferrer noopener nofollow\">38 million<\/a> buyers have already benefited from MI. It allows you to secure a mortgage, even with a low down payment. Plus, if you are unable to make the payments, it compensates the lender for your loan.&nbsp;<\/p>\n\n\n\n<p>Looking for a mortgage lender? choose Houzeo. It lets you compare lender fees and helps you find suitable and affordable deals. Start your dream of American homeownership now!<\/p>\n\n\n\n<h2 class=\"margin-top-28 wp-block-heading\" id=\"What-Is-Mortgage-Insurance\"><strong>What Is Mortgage Insurance?<\/strong><\/h2>\n\n\n\n<p>It is an insurance policy that helps the buyer to qualify for a loan. Moreover, if you hit hard times and are unable to make the payments it can also save you from foreclosure. It acts as a shield that protects both you and your lender. <\/p>\n\n\n\n<p>It can help you compensate in such cases:&nbsp;<\/p>\n\n\n\n<ul class=\"wp-block-list\"><li><strong>Death<\/strong> or severe illness.<\/li><li><strong>Default<\/strong> on payment.<\/li><li>Inability to meet <strong>contract obligations<\/strong><\/li><li><a href=\"https:\/\/www.houzeo.com\/blog\/foreclosures\/\" target=\"_blank\" rel=\"noreferrer noopener\"><strong>Foreclosure<\/strong><\/a> of the property. <\/li><\/ul>\n\n\n\n<p>By mitigating the risk, MI makes homeownership more accessible to you.<\/p>\n\n\n\n<h2 class=\"margin-top-28 wp-block-heading\" id=\"Types-of-Mortgage-Insurance\"><strong>What Are the Types of Mortgage Insurance<\/strong><\/h2>\n\n\n\n<p>There are 2 types of MI: <\/p>\n\n\n\n<ol class=\"wp-block-list\"><li>Private mortgage insurance (PMI).<\/li><li>Mortgage insurance premium (MIP).<\/li><\/ol>\n\n\n\n<h3 class=\"margin-top-15 wp-block-heading\"><strong>What is Private Mortgage Insurance (PMI)?<\/strong><\/h3>\n\n\n\n<p>A <a href=\"https:\/\/www.houzeo.com\/blog\/what-is-pmi\/\" target=\"_blank\" rel=\"noreferrer noopener\">private mortgage insurance<\/a> is only available on a conventional loan. It is required when your down payment is less than 20%. Annual private mortgage insurance rates&nbsp;are around 0.5% to 1.5%.<\/p>\n\n\n\n<p><strong>Types of PMI&nbsp;<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\"><li><strong>Lender-Paid Mortgage Insurance (LPMI):<\/strong> The lender pays your premium by increasing the interest rates. However, despite the higher interest, your monthly payment will be reduced.<\/li><li><strong>Borrower-Paid Mortgage Insurance (BPMI): <\/strong>You have to pay a monthly fee that comes with the mortgage payment. Which includes, the interest and mortgage premiums.<\/li><\/ul>\n\n\n\n<h3 class=\"margin-top-15 wp-block-heading\"><strong>What Is Mortgage Insurance Premium (MIP)?<\/strong><\/h3>\n\n\n\n<p>A MIP is only available on a <a href=\"https:\/\/www.houzeo.com\/blog\/fha-loans\/\" target=\"_blank\" rel=\"noreferrer noopener\">FHA loan<\/a>. It is required on any down payment.&nbsp;Moreover, it comes with an annual mortgage insurance estimate of 0.15% to 0.85%.&nbsp;<\/p>\n\n\n\n<h2 class=\"margin-top-28 wp-block-heading\" id=\"How-to-apply\"><strong>How to Apply for a Mortgage Insurance?<\/strong><\/h2>\n\n\n\n<p>Here\u2019s how you can apply for a MI in just three steps:<\/p>\n\n\n\n<ol class=\"wp-block-list\"><li><strong>Know the Requirements:<\/strong> You need to know the type of insurance needed, the minimum down payment required, and the eligibility criteria set by your lender.<\/li><li><strong>Apply for Mortgage Pre-approval:<\/strong> You can apply for by submitting the <a href=\"https:\/\/www.houzeo.com\/blog\/documents-needed-for-mortgage-pre-approval\/\" target=\"_blank\" rel=\"noreferrer noopener\">documents needed for mortgage pre-approval<\/a>. <\/li><li><strong>Choose a Mortgage Insurer:<\/strong> You need to find an insurance provider. Usually, your lender may help your get a mortgage insurer.<\/li><\/ol>\n\n\n\n<h2 class=\"margin-top-28 wp-block-heading\" id=\"How-to-Calculate\"><strong>How to Calculate Mortgage Insurance?<\/strong><\/h2>\n\n\n\n<p>MI is calculated based on the loan amount and your policy type. Here&#8217;s how you can calculate:<\/p>\n\n\n\n<ul class=\"wp-block-list\"><li><strong>PMI:<\/strong> PMI rate may range from 0.5% to 1.5%. So, if your loan amount is $200,000 on a 0.5% interest. Your annual payments would be $1000 with monthly payments of $83.33. <\/li><li><strong>MIP: <\/strong> Annual MIP rate may range from 0.15% to 0.85%. So, if your loan amount is $200,000. Your annual rate would be $1,700 with monthly payments of $141.67. <\/li><\/ul>\n\n\n\n<h2 class=\"margin-top-28 wp-block-heading\" id=\"Reduce-Mortgage-Insurance-Costs\"><strong>How to Reduce Mortgage Insurance Costs?<\/strong><\/h2>\n\n\n\n<p>MI costs depend on the <a href=\"https:\/\/www.houzeo.com\/blog\/how-much-down-payment-for-a-house\/\" target=\"_blank\" rel=\"noreferrer noopener\">down payment<\/a> and the type of insurance. Here are ways to reduce your cost:&nbsp;<\/p>\n\n\n\n<ul class=\"wp-block-list\"><li><strong>Increase Your Down Payment:<\/strong> You must increase the down payment to eliminate the need for insurance or reduce the premium. <\/li><li><strong>Improve Credit Score:<\/strong> A <a href=\"https:\/\/www.houzeo.com\/blog\/what-is-a-good-credit-score\/\" target=\"_blank\" rel=\"noreferrer noopener\">good credit score<\/a> can help you can cut down or reduce MI cost.&nbsp;This way you can also qualify for better mortgage rates.<\/li><li><strong>Opt for LPMI:<\/strong> Here, the lender pays the premium with a slight increase in interest rates.&nbsp;This might help you reduce the cost. <\/li><\/ul>\n\n\n\n<h2 class=\"margin-top-28 wp-block-heading\" id=\"Differences-Between-PMI-and-MIP\"><strong>What Are the Differences Between PMI and MIP?<\/strong><\/h2>\n\n\n\n<p>Here&#8217;s a detailed differentiation of PMI and MIP:<\/p>\n\n\n\n<figure class=\"wp-block-table\"><table><tbody><tr><td class=\"has-text-align-center\" data-align=\"center\"><strong>Factors<\/strong><\/td><td><strong>Private Mortgage Insurance<\/strong><\/td><td><strong>Mortgage Insurance Premium<\/strong><\/td><\/tr><tr><td class=\"has-text-align-center\" data-align=\"center\">Requirements<\/td><td>PMI is required for conventional loans with an 80% higher loan-to-value ratio.<\/td><td>MIP is required for specific government-backed loans like <a href=\"https:\/\/www.houzeo.com\/blog\/usda-loans\/\" target=\"_blank\" rel=\"noreferrer noopener\">United states department of agriculture loans<\/a> (USDA) and Federal housing administration loans (FHA).<\/td><\/tr><tr><td class=\"has-text-align-center\" data-align=\"center\">Premium Rates&nbsp;<\/td><td>Annual premium rates are from 0.3% to 1.5%<\/td><td>Annual premium rates are from 0.45% to 1.0%.<\/td><\/tr><tr><td class=\"has-text-align-center\" data-align=\"center\">&nbsp;Cancelation<br>Policy<\/td><td>You can cancel PMI once your home equity reaches 20%.&nbsp;<\/td><td>You can cancel MIP after 11 years, if you have put down payment is 10% or more.&nbsp;<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<h2 class=\"margin-top-28 wp-block-heading\" id=\"Bottom-Line\"><strong>Bottom Line<\/strong><\/h2>\n\n\n\n<p>MI is a lifesaver for many homebuyers. You can easily qualify for a mortgage loan with a low down payment and credit scores. If you are a first-time homebuyer looking for an insurance policy, then MIP can definitely help you. With just a 3.5% down payment and a credit score of 580, you can easily avail it.<\/p>\n\n\n\n<p>Moreover, if you are a repeat buyer looking for a high-cost property, opt for PMI. You need a minimum down payment of 3% and a credit score between 580 and 620. So, why wait? Start looking for your dream home now! Your American dream of homeownership is just a few clicks away.<\/p>\n\n\n\n<h2 class=\"margin-top-28 wp-block-heading\"><strong>Find Your New Home With Houzeo<\/strong><\/h2>\n\n\n\n<p>With thousands of property listings, Houzeo.com is one of the biggest property listing sites in the US. Find condos, townhouses, co-ops, and other types of <a href=\"https:\/\/www.houzeo.com\/homes-for-sale\" target=\"_blank\" rel=\"noreferrer noopener\">homes for sale<\/a> on Houzeo.<\/p>\n\n\n\n<p class=\"margin-top-15\"><strong>\u00bb Need More Clarity?&nbsp;<\/strong>Read these exclusive&nbsp;<a href=\"https:\/\/www.realestatequeen.com\/houzeo-reviews\/\" target=\"_blank\" rel=\"noreferrer noopener\">Houzeo reviews<\/a>&nbsp;and learn why the platform is the best in America\u2019s competitive housing market.<\/p>\n\n\n\n<h2 class=\"margin-top-28 wp-block-heading\" id=\"faq\"><strong>Frequently Asked Questions<\/strong><\/h2>\n\n\n\t\t<div class=\"wp-faq-schema-wrap wp-faq-schema-accordion\">\n\t\t\t\t\t\t<div class=\"wp-faq-schema-items\">\n\t\t\t\t\t\t\t\t\t<p class=\"ui-accordion-header\">\n\t\t\t\t\t\tIs mortgage insurance different than mortgage protection insurance?\t\t\t\t\t\t<span class=\"ui-accordion-header-icon ui-icon ui-icon-triangle-1-s\"><\/span>\n\t\t\t\t\t<\/p>\n\t\t\t\t\t<div class=\"ui-accordion-content\">\n\t\t\t\t\t\t<p>A <a href=\"#What-Is-Mortgage-Insurance?\">mortgage insurance<\/a> is different from mortgage protection insurance. MPI is a life insurance. It is paid when the borrower passes away or is unable to pay. Whereas, mortgage insurance only covers the loss if you default on a payment. <\/p>\n\t\t\t\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t\t\t\t\t\t<p class=\"ui-accordion-header\">\n\t\t\t\t\t\tHow to pay mortgage insurance premium?\t\t\t\t\t\t<span class=\"ui-accordion-header-icon ui-icon ui-icon-triangle-1-s\"><\/span>\n\t\t\t\t\t<\/p>\n\t\t\t\t\t<div class=\"ui-accordion-content\">\n\t\t\t\t\t\t<p>The mortgage insurance premium is made on <a href=\"https:\/\/www.houzeo.com\/blog\/fha-loans\/\" target=\"_blank\">FHA-backed mortgage loans<\/a>. It is paid as a monthly payment to the lender. <\/p>\n\t\t\t\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t\t\t\t\t\t<p class=\"ui-accordion-header\">\n\t\t\t\t\t\tHow to cancel PMI?\t\t\t\t\t\t<span class=\"ui-accordion-header-icon ui-icon ui-icon-triangle-1-s\"><\/span>\n\t\t\t\t\t<\/p>\n\t\t\t\t\t<div class=\"ui-accordion-content\">\n\t\t\t\t\t\t<p>PMI is a <a href=\"#Types-of-Mortgage-Insurance\"> type of mortgage insurance <\/a>, that you can cancel once your home equity reaches 20% or more. <\/p>\n\t\t\t\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\n","protected":false},"excerpt":{"rendered":"<div class=\"new-excerpt\"><p class=\"small-desc\">Mortgage insurance is a policy that can save your property from foreclosure. Annual rates for PMI and MIP are around 0.3% to 1.5% and 0.45% to...<\/p><\/div><div class=\"reading_date\"><span class=\"readtime\">5 mins read<\/span><span class=\"date\">Nov 11, 2024<\/span><\/div>","protected":false},"author":102,"featured_media":426335,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[46225,46242],"tags":[35851,36202,36199,36228,36227],"class_list":["post-353551","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-buyer","category-mortgage","tag-fha-mortgage-insurance","tag-how-much-is-mortgage-insurance","tag-insurance-premium-on-mortgage","tag-mortgage-loan-insurance","tag-what-is-mip"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v26.6 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>What Is Mortgage Insurance and How Does It Work?<\/title>\n<meta name=\"description\" content=\"Mortgage insurance is a policy that can save your property from foreclosure. Annual rates for PMI and MIP are around 0.3% to 1.5% and 0.45% to 1.0%.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.houzeo.com\/blog\/mortgage-insurance\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"What Is Mortgage Insurance and How Does It Work?\" \/>\n<meta property=\"og:description\" content=\"Mortgage insurance is a policy that can save your property from foreclosure. Annual rates for PMI and MIP are around 0.3% to 1.5% and 0.45% to 1.0%.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.houzeo.com\/blog\/mortgage-insurance\/\" \/>\n<meta property=\"og:site_name\" content=\"Houzeo Blog\" \/>\n<meta property=\"article:published_time\" content=\"2024-11-11T07:13:00+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2025-02-11T10:53:56+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/www.houzeo.com\/blog\/wp-content\/uploads\/2023\/11\/Mortgage-Insurance_-Everything-You-Need-to-Know.webp\" \/>\n\t<meta property=\"og:image:width\" content=\"810\" \/>\n\t<meta property=\"og:image:height\" content=\"435\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/webp\" \/>\n<meta name=\"author\" content=\"Bhagyesh Behere\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Bhagyesh Behere\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"4 minutes\" \/>\n<!-- \/ Yoast SEO plugin. -->","yoast_head_json":{"title":"What Is Mortgage Insurance and How Does It Work?","description":"Mortgage insurance is a policy that can save your property from foreclosure. Annual rates for PMI and MIP are around 0.3% to 1.5% and 0.45% to 1.0%.","robots":{"index":"index","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"canonical":"https:\/\/www.houzeo.com\/blog\/mortgage-insurance\/","og_locale":"en_US","og_type":"article","og_title":"What Is Mortgage Insurance and How Does It Work?","og_description":"Mortgage insurance is a policy that can save your property from foreclosure. Annual rates for PMI and MIP are around 0.3% to 1.5% and 0.45% to 1.0%.","og_url":"https:\/\/www.houzeo.com\/blog\/mortgage-insurance\/","og_site_name":"Houzeo Blog","article_published_time":"2024-11-11T07:13:00+00:00","article_modified_time":"2025-02-11T10:53:56+00:00","og_image":[{"width":810,"height":435,"url":"https:\/\/www.houzeo.com\/blog\/wp-content\/uploads\/2023\/11\/Mortgage-Insurance_-Everything-You-Need-to-Know.webp","type":"image\/webp"}],"author":"Bhagyesh Behere","twitter_card":"summary_large_image","twitter_misc":{"Written by":"Bhagyesh Behere","Est. reading time":"4 minutes"},"schema":{"@context":"https:\/\/schema.org","@graph":[{"@type":"WebPage","@id":"https:\/\/www.houzeo.com\/blog\/mortgage-insurance\/","url":"https:\/\/www.houzeo.com\/blog\/mortgage-insurance\/","name":"What Is Mortgage Insurance and How Does It Work?","isPartOf":{"@id":"https:\/\/www.houzeo.com\/blog\/#website"},"primaryImageOfPage":{"@id":"https:\/\/www.houzeo.com\/blog\/mortgage-insurance\/#primaryimage"},"image":{"@id":"https:\/\/www.houzeo.com\/blog\/mortgage-insurance\/#primaryimage"},"thumbnailUrl":"https:\/\/www.houzeo.com\/blog\/wp-content\/uploads\/2023\/11\/Mortgage-Insurance_-Everything-You-Need-to-Know.webp","datePublished":"2024-11-11T07:13:00+00:00","dateModified":"2025-02-11T10:53:56+00:00","description":"Mortgage insurance is a policy that can save your property from foreclosure. Annual rates for PMI and MIP are around 0.3% to 1.5% and 0.45% to 1.0%.","inLanguage":"en-US","potentialAction":[{"@type":"ReadAction","target":["https:\/\/www.houzeo.com\/blog\/mortgage-insurance\/"]}]},{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/www.houzeo.com\/blog\/mortgage-insurance\/#primaryimage","url":"https:\/\/www.houzeo.com\/blog\/wp-content\/uploads\/2023\/11\/Mortgage-Insurance_-Everything-You-Need-to-Know.webp","contentUrl":"https:\/\/www.houzeo.com\/blog\/wp-content\/uploads\/2023\/11\/Mortgage-Insurance_-Everything-You-Need-to-Know.webp","width":810,"height":435,"caption":"Mortgage Insurance_ Everything You Need to Know"},{"@type":"WebSite","@id":"https:\/\/www.houzeo.com\/blog\/#website","url":"https:\/\/www.houzeo.com\/blog\/","name":"Houzeo Blog","description":"","publisher":{"@id":"https:\/\/www.houzeo.com\/blog\/#organization"},"potentialAction":[{"@type":"SearchAction","target":{"@type":"EntryPoint","urlTemplate":"https:\/\/www.houzeo.com\/blog\/?s={search_term_string}"},"query-input":{"@type":"PropertyValueSpecification","valueRequired":true,"valueName":"search_term_string"}}],"inLanguage":"en-US"},{"@type":"Organization","@id":"https:\/\/www.houzeo.com\/blog\/#organization","name":"Houzeo","url":"https:\/\/www.houzeo.com\/blog\/","logo":{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/www.houzeo.com\/blog\/#\/schema\/logo\/image\/","url":"https:\/\/www.houzeo.com\/blog\/wp-content\/uploads\/2020\/07\/new-logo.png","contentUrl":"https:\/\/www.houzeo.com\/blog\/wp-content\/uploads\/2020\/07\/new-logo.png","width":190,"height":55,"caption":"Houzeo"},"image":{"@id":"https:\/\/www.houzeo.com\/blog\/#\/schema\/logo\/image\/"}}]}},"_links":{"self":[{"href":"https:\/\/www.houzeo.com\/blog\/wp-json\/wp\/v2\/posts\/353551","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.houzeo.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.houzeo.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.houzeo.com\/blog\/wp-json\/wp\/v2\/users\/102"}],"replies":[{"embeddable":true,"href":"https:\/\/www.houzeo.com\/blog\/wp-json\/wp\/v2\/comments?post=353551"}],"version-history":[{"count":44,"href":"https:\/\/www.houzeo.com\/blog\/wp-json\/wp\/v2\/posts\/353551\/revisions"}],"predecessor-version":[{"id":686228,"href":"https:\/\/www.houzeo.com\/blog\/wp-json\/wp\/v2\/posts\/353551\/revisions\/686228"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.houzeo.com\/blog\/wp-json\/wp\/v2\/media\/426335"}],"wp:attachment":[{"href":"https:\/\/www.houzeo.com\/blog\/wp-json\/wp\/v2\/media?parent=353551"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.houzeo.com\/blog\/wp-json\/wp\/v2\/categories?post=353551"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.houzeo.com\/blog\/wp-json\/wp\/v2\/tags?post=353551"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}