Mortgage Insurance
PMI offers mortgage insurance in the United States, Australia and New Zealand, Europe, and Hong Kong. In the United States, PMI offers mortgage insurance to credit union customers through CMG Mortgage Insurance Company, a joint venture with CUNA Mutual Group.
Mortgage lenders traditionally prefer a down payment of at least 20 percent of a home’s value, but that can be a significant barrier to ownership for many first-time homebuyers. Private mortgage insurance makes the difference, often enabling consumers to purchase homes with a down payment of just 3 percent, or even less.
Lenders and investors generally require mortgage insurance on low down payment loans (also called high loan-to-value (LTV) loans or high-ratio loans because of the high ratio of the amount of the mortgage loan to the value of the property) because studies show that borrowers with less than 20 percent invested in a house are more likely to default on a mortgage.
With mortgage insurance, PMI shares the risk of foreclosure with the lender. This gives the lender the confidence to make a loan, and helps families get into homes earlier than they might otherwise be able to.
PMI plays a vital role in helping low- and moderate-income families around the world become homeowners. Mortgage insurance aids affordability because it allows families to buy homes with less cash in the form of a down payment or deposit. A home purchase can be made years sooner with mortgage insurance.
