Many prospective home buyers are financially prepared for the day-to-day cost of owning a home. What they lack is the lump sum of money required up front: a 20% down payment. That’s where private mortgage insurance (MI) comes in.

MI is insurance that protects the lender against loss in case of default by the borrower. With the insurance, a lender can loan up to 100% of the value of a house – or even higher in some states, depending on the borrower’s credit history.

Mortgage insurance is not a form of life insurance; it won’t pay off your mortgage loan in the event of a death. And no part of your premium is used to pay a commission or points to the lender. Your entire premium goes to provide coverage.

Mortgage insurance plans are available for most types of loans and with varying premium payment options. Your lending professional can help you choose the plan that best suits your needs. Mortgage lenders apply to MI companies for coverage; you are not required to complete additional forms or to make a new set of payments. You would pay the premium to your lender as part of your monthly mortgage payment.

Unlike many other financing options, private mortgage insurance can be canceled when it’s no longer needed. The Homeowner’s Protection Act requires lenders to:

• Inform home buyers both at closing and annually about their right to request mortgage insurance cancellation and how to do it.

• Cancel insurance automatically at a certain point for homeowners who have not already requested it.

Over the last decade, mortgage lenders and mortgage insurers like United Guaranty have worked to make home ownership a reality for more Americans than ever before. Mortgage insurance offers many benefits to you as a homeowner and helps you get the home of your dreams today – not in the distant future.

For more information about private mortgage insurance, visit PrivateMI.com.