 Sam
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 Posted: Thu Apr 08, 2004 4:59 am Post subject: Insured Mortgage |
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Insured mortgages are mortgages insured either by the Federal Housing Administration (F.H.A.) or by private mortgage insurance (P.M.I.). In the incidence of the borrower defaulting on the loan, the insurer has to pay the lender either the amount of loss incurred or the amount insured-whichever is lower.
- FHA loans:
The Federal housing administration, a federal agency within the US Department of Housing and Urban Development insures mortgages. This implies that on default by any borrower, the FHA insurance protects a lender from financial loss. The FHA loans are meant for moderate and low income borrowers who wish to purchase homes or refinance their current mortgages.
- PMI or Private mortgage insurance:
Homeowners taking a loan amount equal to or more than 80% of the property value, are required to pay for private mortgage insurance premiums. The PMI helps lenders to compensate for any loss incurred in case of default by the borrowers.
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