What Exactly Is Mortgage Insurance?

The definition of mortgage insurance (also known as mortgage guarantee or PMI) is “an insurance policy which compensates lenders or investors for losses due to the default of a mortgage loan. Mortgage insurance can be either public or private depending upon the insurer.”   Many people confuse PMI with homeowner’s insurance. These are actually very different!   Homeowner’s insurance insures the property: dwelling, personal property, other structures on the property, etc.  Mortgage insurance still offers protection, but not to you or your home….it’s for the bank who made the loan on your purchase.  In essence, mortgage insurance protects the bank from loss in case you, the new borrower, fails to make your payments, and the...

Read More