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What is LPMI?


Post number three in our Loan Mechanics: The Inner Workings of a Mortgage series is all about LPMI.

LPMI is exactly what it sounds like—the lender pays for the mortgage insurance. The fact that someone else is paying for it doesn’t make it free, but depending on your circumstance, it could save you some cash.

A price adjustment for LPMI is typically reflected in a higher interest rate. Still, some borrowers can benefit from lower monthly payments and greater potential tax deductibility. Plus, the overall loan cost can be lower than for loans with conventional mortgage insurance.  If you want to see how it compares to other options, check out this blog post from 2011 where we compared this option, to several other options as well.

We’re here to help you make comparisons, so never hesitate to ask. My team’s contact information is found here.

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