Mortgages: How Much? (1 Viewer)

[Patrick Larkin]

And like any insurance product, it makes more money then it gives out.

I never said PMI allows the lender to foreclose. I said its existence makes it easier.

If the VA loan is like the FHA loan, you still pay PMI.

 

[Brian Perry]

PMI was created to protect the lenders' risk on low downpayment loans.

Why wouldn't a lender simply charge a higher interest rate for a loan with a sub-20% down payment? In other words, instead of loaning money at 6% and charging PMI, why not charge 6.125% and use the extra money to pay for an insurance policy? That way, the lender gets the protection and the borrower gets the tax break.

 

[nolesrule]

Probably for the same reason they can't charge a higher interest rate and pay the hazard insurance and property taxes from the interest. PMI is paid through an escrow account on your behalf by the lender or billed separately. PMI is not part of the mortgage and thus cannot be included in the P&I, like escrow payments or line-item closing costs.

 

[Bill Lucas]

VA loans do not have MIP (with FHA loans it is MIP, not PMI) payments like FHA loans. VA loans have a one time funding fee which used to be (and still may be) 1% of the loan amount. Can you tell that I was a loan officer for quite some time?