Video transcript: What is PMI?
On screen:
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On screen:
What's Private Mortgage Insurance? What's PMI?
On screen:
Ronald, Mortgage Banker
Ronald:
PMI is Private Mortgage Insurance. If you do not put 20% down on the purchase of your home, with some particular programs, you're gonna have a mortgage insurance, which is an insurance that covers the lender in case the borrower were to default on the mortgage.
On screen:
Curt, Mortgage Banker
Curt:
So it's basically insurance that the investor on the loan, which is normally Fannie Mae or Freddie Mac, places on the loan in case of default. Because it is a higher loan-to-value loan, there's more mortgage on the property than a normal loan with a larger down payment.
On screen:
How am I billed for PMI?
Curt:
It's gonna be built into your mortgage payment, and you're going to see it on your statement. The lender does what is called escrowing. So they escrow the amount of the mortgage insurance premium, and then the lender sends it separately to the mortgage insurer as part of your mortgage payment.
On screen:
Jonathan, Mortgage Banker
Jonathan:
So it's a monthly charge on top of your principal and interest payment, taxes and insurance, that you would pay essentially until the loan-to-value is at 80% or less.
On screen:
Private Mortgage Insurance (PMI)
- Applies when your down payment is below 20%
- Protects the lender in case of default
- Built into your monthly mortgage payment
On screen:
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