PRIVATE MORTGAGE INSURANCE

Private mortgage insurance is designed to protect the lender against losses generally attributed to high loan-to-value ratio loans.  The basic premise is that loans with a LTV ratio of 80.01% or higher are required to provide protection for the lender in the form of PMI.  In this case, the borrower pays a monthly premium with the mortgage payment.  The lender is thereby protected against default by the borrower.  There is no benefit to the borrower for this premium, other than the obvious value of making a lower down payment

LENDER REVIEW - Lenders are required to obtain approval by a private mortgage insurer in order to offer private mortgage insurance.  The qualifications of the lender are evaluated and the determination is made to accept PMI insurance applications form the lender on behalf of a particular borrower.

UNDERWRITING - Once the lender has verified and underwritten the borrower's loan application, the credit insurance application is submitted with the credit package to the PMI company.  The PMI company then review and accepts or rejects the package.  If accepted, the loan then proceeds to closing.  This underwriting review usually is accomplished in a few days, unless there are issues that the underwriter feels need to be resolved before approval is give.