Private Mortgage Insurance

If your down payment on a home is less than 20 percent of the appraised value or sale price, you are required to get private mortgage insurance. This is not the same as homeowner insurance; a mortgage insurance policy helps protects the lender in case of default on the payments. There are two types of private mortgage insurance: lender-paid mortgage insurance (LPMI) and borrower-paid mortgage insurance (BPMI). Which one is right for you?


Borrower-Paid Mortgage Insurance

 

What it is: 

  • Premium is added to your monthly payment
  • May cause you to have higher monthly payments
  • May be tax deductible*
  • May be canceled when the loan-to-value reaches 80% of the original value**

Best if you: 

  • Will stay in your home over 10 years
  • Have a long-term mortgage
  • Need to borrow less than 85% of your home's value
  • Want to make higher monthly payments so you can cancel BPMI later
  • Think your home's value will increase

Lender-Paid Mortgage Insurance

  

What it is: 

  • Cost of insurance is included in your interest rate/APR, creating a higher rate
  • Could lower your monthly payments
  • You may receive a larger tax deduction*
  • Cannot be canceled by you, the borrower**

Best if you: 

  • Will move or refinance within 10 years
  • Have a short-term mortgage
  • Need to borrow more than 85% of your home's value
  • Want a lower monthly payment
  • Want a possible larger tax deduction*

Easily apply online, over the phone, or in person by scheduling an appointment at 256-882-8500.

 

Mortgages are only available for properties located in Alabama and Tennessee.

*Consult your tax advisor regarding the deductibility of mortgage interest and private mortgage insurance premiums.

**LPMI typically terminates only when the loan is refinanced, paid-off, or otherwise terminated. For BPMI, when the loan-to-value ratio reaches 78% of the original value, BPMI will be automatically terminated.

Loans subject to credit approval. Must be RFCU member to obtain mortgage. Other restrictions may apply. Contact Credit Union for details. Various types of mortgage loan programs and terms are available. RFCU is an Equal Credit Opportunity Lender. Rates, terms and conditions are subject to change without notice. Must create separate user name and password to gain access to mortgage application process.

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800-234-1234 x8500 (toll free)
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