Why Do Private Mortgage Insurance Companies Need To Approve My Loan?
A private mortgage insurance (MI) company provides assurance to a lender that a portion of your loan and associated costs will be re-paid in the event of foreclosure. Such insurance is required by residential lenders when buyers purchase with less than 20 percent down.
A private insurance company is interested in your credit, income, and debts as well as the market value of the property and whether it has good and marketable title — in essence everything that also concerns the prime lender.
Because it could sustain a substantial loss if you default on your loan, MI companies naturally and necessarily must approve any loan for which they provide insurance.
And yes, it does happen that a lender will say “yes” to a mortgage an MI company will say “no” — in which case the loan will be declined if the lender cannot find another MI carrier to provide coverage.
© Copyright 