Mortgage Insurance Explained: Why You’re Paying It and How to Stop

Описание: In this final segment of Go Gaddis Real Estate Radio, host Cleve Gaddis and mortgage expert Matthew Scout from Southeast Mortgage demystify one of the most misunderstood aspects of home buying: Mortgage Insurance.

If you’ve ever wondered what you’re actually paying for or how to stop paying it, this episode is a must-listen. Cleve and Matthew break down the different types of insurance and provide a roadmap for homeowners to eliminate this extra monthly cost.

1. What is Mortgage Insurance (and Who is it For?)
Many homeowners confuse Mortgage Insurance with Homeowners Insurance, but they serve very different purposes. We explain:

The Lender’s Safety Net: Unlike your standard policy that protects your structure, mortgage insurance is actually a policy that protects the lender in case of default.

Private Mortgage Insurance (PMI) vs. Mortgage Insurance Premium (MIP): The nuances between conventional loan insurance and the premiums required for FHA loans.

2. The 20% Benchmark: Avoiding the Cost Upfront
Is it possible to buy a home without paying mortgage insurance? Matthew explains the rules:

Conventional Loans: If you put down 20% or more, you generally bypass mortgage insurance entirely.

Lender-Paid Options: How some lenders can pay the insurance for you in exchange for a slightly higher interest rate.

FHA Exceptions: Why FHA loans typically require mortgage insurance regardless of the down payment size—and why this might change soon.

3. How to Get Rid of Mortgage Insurance Early
You don't have to wait 30 years to stop paying for PMI. There are two primary ways to remove it:

The 20% Request: Once your loan-to-value ratio reaches 20% based on the original appraised value, you can proactively call your lender to request its removal.

Automatic Removal: By law, lenders must automatically remove mortgage insurance once you reach 22% equity (78% loan-to-value).

The Appraisal Strategy: Did you know you can request a new appraisal if you believe your home's value has increased enough to hit that 20% equity mark?.

4. More Ways AI is Changing the Game
Continuing from the previous segment, we look at how AI is creating a better experience for the borrower.

Fewer Surprises: AI reads documents and compares them to Fannie Mae and Freddie Mac guidelines in real-time, catching potential issues weeks before they would have normally surfaced.

Minimal Paperwork: Because AI can find and verify data more efficiently, borrowers are often asked for significantly fewer documents than in years past.

At Go Gaddis Real Estate Radio, we want you to have all the facts before you sign on the dotted line.

👉 Ready for your "Get Ready Guarantee"? Spend just 20 minutes on the phone with Matthew Scout to get a full report on your mortgage readiness.

Connect with Matthew Scout, Southeast Mortgage: 📞 Cell: 480-636-6762 📧 Email: [email protected]

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To buy or sell your home with a team that blends heritage and innovation, visit Modern Traditions Realty Group: https://moderntraditionsrealty.net/home