Many lenders are again touting their 5% or 10% down loans with no private mortgage insurance (PMI). Almost all lenders (including JVM) offer this through a product called Lender Paid Mortgage Insurance (LPMI).
With LPMI, borrowers take a higher rate in exchange for no PMI. Lenders get more yield premium or commission with the higher rate and they use it to pay-off the PMI with a one-time up-front payment.
LPMI is not a good deal b/c borrowers are stuck with the higher rate forever, no matter how much equity they accumulate. With regular PMI, borrowers get a lower rate and then can eliminate PMI in 2+ years, depending on their equity.
Take the PMI; it is a better in the long run than LPMI.
Jay Voorhees
Founder/Broker | JVM Lending
(855) 855-4491 | DRE# 01524255, NMLS# 335646
