Checking out an online piece dealing with some technical adjustments having to do with mortgage insurance the other day, I came across an indisputable statement:
“Many homeowners are confused about the difference between PMI (private mortgage insurance) and mortgage protection insurance (MPI).”
That, if anything, is a considerable understatement—especially because St. Louis homeowners can sometimes find “mortgage protection insurance” abbreviated as well. If your professional duties include distinguishing the finer points of St. Louis mortgages for your clients, you are unlikely to confuse “PMI” with “MPI.” But for the rest of humanity, that’s not necessarily the case. Since the difference is substantive, here’s a 30-second primer:
PMI is Private Mortgage Insurance. It’s designed to protect the lender rather than the homeowner. If St. Louis homeowners run into trouble—for instance, if they were to lose their job—the PMI coverage will reimburse the lender for any shortfalls. PMI coverage is usually required when St. Louis homeowners pay less than 20% of a property’s sale price as the down payment. When the loan-to-value of the mortgage reaches 78%, these policies can usually be canceled (sometimes that’s done automatically).
MPI is Mortgage Protection Insurance—a very different animal. This protects the St. Louis homeowners, covering missed mortgage payments for designated periods of time under specific circumstances. Unlike PMI, this insurance is strictly voluntary on the homeowner’s part. MPI policies may pay off the entire mortgage if the homeowner dies—but those who have adequate life insurance policies may find that expense unnecessary.
Part of my job is to be sure my clients stay informed about how each part of a home buying or selling procedure stands to affect their interests. I hope you’ll call me whenever St. Louis real estate or mortgage matters arise! 636.329.4100
