Lender Paid Mortgage Insurance or LPMI is a way to avoid paying traditional mortgage insurance (PMI). In return for a small increase to your interest rate, the lender will pay the mortgage insurance for you.
This benefits you the borrower in that the payment on this type of loan is usually lower than a traditional loan with Private Mortgage Insurance (PMI).
LPMI is not for everyone. If you plan on keeping your home for the life of the loan, you are locked into a great fixed interest rate and never have any plan of refinancing that mortgage then it may be better to pay the PMI instead of the Lender paid mortgage insurance. Depending on your lender and their guidelines, you may be able to drop the PMI once your loan reaches either 78% or 80% of your home’s value.
With LPMI you are stuck with the increase to your interest rate for the life of the loan.
Call Franklin Advantage for more details on LPMI. (800) 314-5626
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