VA Loan Benefits: No Mortgage Insurance Required
When it comes to insurance (auto, health, homeowners, etc.) they all have the same thing in common: it is never fun having to pay the premiums, but always a relief when the insurance company foots the bill. But what if you have to write the check to pay the premiums, yet you are not the one being insured?
This is the case with Private Mortgage Insurance (PMI). PMI is insurance the lender requires their borrowers to pay when they don’t put a minimum of a 20% down payment on a home purchase. Not to be confused with homeowners’ insurance, PMI does not insure the homeowner, instead – mortgage insurance insures the lender in the event the borrower goes into default and the lender needs to foreclose on the property. In this circumstance, PMI insures the lender (up to a certain percentage of the loan) to offset loses incurred during the foreclosure process.
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