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Should You Sign Up for Private Mortgage Insurance?

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  • Description

    Shattered Dreams: Real estate expert Bob Massi weighs in

  • Duration 3:35
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This transcript is automatically generated

Never buy a house -- they tell you whether or not you need.

-- -- -- is supposed to protect lenders from homeowners when they default but the extra insurance the PMI is now presenting.

A hidden hurdle that many homeowners find themselves facing before they even knew it Fox News legal analyst Bob -- series is right now from Vegas to -- -- are.

Good morning it's the face you okay you know.

I bought a couple of houses and I've hated the idea of having a -- PMI because -- it can be hundreds of dollars a month.

But actually if you are foreclosed PMI can you can bail you out explain that.

Well here first of all of mortgage insurance applied only to conventional loans not FHA or -- because we're there already assured so.

-- assurances there that the issue behind it was if you didn't have.

20% to put down on your homes and particularly 56 years ago although it's still exists now then they lenders would say look we'll give me the -- But because you'd have enough money to put down we you have to buy mortgage insurance right and basically that there and so most people -- didn't put 20% down have mortgage insurance.

So -- so PM lie then.

What this is -- -- people you know PMI is extra insurance that lenders require.

For most homeowners who put less than 20% down on -- home exactly at.

Go ahead.

I'm sorry -- the concept behind it is this is protection for the Lander.

So if if a a person has a home now let's say and they either -- sold the home or the house foreclosed on.

That mortgage insurance is there to pay -- portion.

-- the deficit of what's owed on that loan.

That things -- The problem the problem Steve is most of us as homeowners what we signed those three or four inches of documents to buy a home.

Don't understand we have mortgage insurance if they pay that deficit.

Right that -- assurance has the right to go after the homeowner for that money that was paid.

Sure and historically.

People gotten private mortgage insurance because -- they didn't have enough two.

You know to buy the house out right -- to finance it without that.

But now and and ten years ago whoever would've thought we had such a gigantic wave of foreclosures this is actually bailing people out.

It's it's battling the lenders out because the lenders then.

Are going to be pagelets it is 200000 dollar deficit from a from a foreclosure.

The mortgage insurance will pay eight part of that.

And then it's -- theory called segregation segregation means that the insurance company then steps and issues of the lender.

And has the right to contact.

Hey -- the homeowner and say look you bought us you paid a premium we hated to protect you.

But by the way we have the right if we choose.

To get that money back from you the homeowner and bring a lot of people are talking about this and the reason I want our viewers to understand this is that.

When you pay for mortgage insurance it doesn't mean that whatever you pay for -- pay the lender that you basically walk away from that that they do have the right to pursue it.

It's really.

Interest -- never thought about that particular angle.

You've got Bob -- around He answers your questions all the time if you've got one for mr.

-- -- Vegas.

Plug on the FOX & Friends dot com.

Can't answer your questions thank you Robert have a great day of their legacy you to search for a few.

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