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| Borrower Paid Mortgage Insurance (BPMI) |
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Private Mortgage Insurance is provided by a private mortgage insurance company to protect lenders against loss
if a borrower defaults. Most lenders generally require mortgage insurance where the Loan-To-Value (LTV) is in
excess of 80%.
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| Piggyback Home Equity Line of Credit (HELOC) |
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A HELOC is a mortgage loan, which is usually in subordinate position, that allows borrowers to obtain multiple
advances of the loan proceeds at their own discretion, up to an amount that represents a specific persentage
of the borrower's equity in the property.
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| Piggyback 1st & 2nd Mortgage |
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A second mortgage loan can be used to reduce the cash required for down payment for the purchase of a property.
For example, if a borrower is buying a house for $200,000.00 and his/her down payment is $40,000.00, he/she can
reduce this down payment to $20,000.00 by getting a second mortgage for $20,000.00. Usually the interest rate on
the second mortgage will be higher than the interest rate for the first mortgage because second mortgage have
more risks for lenders. In the event the borrower defaults on the mortgage, the second mortgage will be repaid
only after the first mortgage is paid off.
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| Lender Paid Mortgage Insurance (LPMI) |
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In the past, borrowers with less than 20% down payment would have to pay mortgage insurance unless they took out a
second mortgage that "piggybacks" on their first mortgageor a HELOC. Now, with the new LPMI option, lenders will pay
borrower's mortgage insurance for them and borrowers will not have to worry about having more than one mortgage or
making more than one monthly payment. One reason homeowners don't like mortgage insurance is because it's not tax
deductible, while interest on the second mortgages usually is. With LPMI, the lender pays a borrower's mortgage
insuranceby rolling the cost into the interest rate or by adjusting the fee.
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| Single Financed Mortgage Insurance (SFMI) |
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Single Financed Mortgage Insurance (SFMI) is a type of mortgage insurance that is financed right into the loan amount.
If the MI is terminated (i.e. through sale, refinance or a new appraisal accepted by the lender) any time before the
date that it was originally projected to reach 78% LTV, a portion of a premium will be refunded. An added bonus to
SFMI is that it includes optional Involuntary Unemployment Insurance (IUI) coverage. IUI is provided in the first 24
months of the mortgage term. In the event of the borrower's involuntary unemployment (including layoff, strike and lock-out),
IUI will cover the borrower's full monthly mortgage payment (capped at $2,000.00) for up to six months.
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