Mortgage insurance: Protects the lender for any losses suffered if the borrower defaults on the payment. Mortgage insurance is typically included in a monthly mortgage payment. Conventional and FHA loans have mortgage insurance, but they are structured differently.
Lender Paid Mortgage Insurance (conventional loans): Also known as LPMI, it’s when the lender pays your mortgage insurance but charges you in a form of higher interest rate (usually an additional .25-.5%).
Choosing between LPMI and BPMI depends on the borrower’s long-term goals for the property. Sometimes with LPMI the monthly payment will be lower, but over the life of the loan you may pay more in interest payments. There is a lot to consider.
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