What Is Mortgage Insurance?

theresa rolen • October 11, 2025

The Basics — Why Mortgage Insurance Is Actually A Good Thing

Let’s be honest — “mortgage insurance” sounds like another one of those mysterious lender fees that’s just out to drain your wallet. But here’s the truth: mortgage insurance isn’t the villain of the homebuying story. In fact, it’s often the hero that helps you buy a home sooner than you thought possible.

The Basics — What Mortgage Insurance Actually Is

Mortgage insurance (often called PMI for conventional loans or MIP for FHA loans) is a type of protection that benefits the lender if you stop making payments on your mortgage. It’s not homeowner’s insurance, and it doesn’t cover your stuff — it covers the lender’s risk.

Before you roll your eyes, here’s why that’s not a bad thing. Without mortgage insurance, lenders would require most people to put 20% down to even qualify for a loan. With it, you can often get approved with as little as 3% down — and that’s a game changer for most buyers.

Why It Exists

Think of mortgage insurance like a safety net that lets lenders take a leap of faith on you. When you don’t have a massive down payment, PMI gives the lender confidence that their investment is protected — and you get to buy the home you want now, not five years from now after saving every spare dollar.

When It Applies

If you’re getting a conventional loan and put down less than 20%, you’ll likely pay PMI. If you’re using an FHA loan, you’ll pay a form of it called MIP (Mortgage Insurance Premium). VA and USDA loans? Good news — those don’t require ongoing mortgage insurance (one of many reasons those programs rock).

How Much It Costs

PMI usually costs between 0.3% to 1.5% of your loan amount per year, depending on your credit score and down payment. The good news? For conventional loans, once you reach 20% equity in your home, you can request to have it removed.

Why It’s Not All Bad

Yes, it’s an extra cost — but it’s also a shortcut to homeownership. Instead of waiting years to save up a 20% down payment, you can get into a home now, start building equity, and refinance or drop PMI later. That’s like getting a head start while everyone else is still sitting on the sidelines.

Bottom Line

Mortgage insurance doesn’t have to be your enemy. It’s simply a stepping stone — a tool that opens the door to homeownership when saving up a massive down payment isn’t realistic. And once you’ve built some equity, you can kick it to the curb and enjoy lower payments down the road.

If you’re wondering how PMI might affect your buying power or what loan options can minimize it, I can help you run the numbers and explore smarter financing strategies that fit your goals.

Contact me for more information - Theresa Rolen (913) 705-0049 NMLS 2249004 | Summit Lending NMLS 1850081

Equal Housing Opportunity

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When a Pre-Approval Isn’t Actually Approval

By theresa rolen • December 30, 2025

When a Pre-Approval Isn’t Actually Approval Why Realtors Can’t Afford to Blindly Trust Every Lender In today’s market, getting an offer accepted isn’t the hard part. Getting it to close is. Lately, I’ve been pulled into multiple “rescue missions”—offers accepted, homes taken off the market, timelines set… only for the deal to start unraveling once underwriting gets involved. Different buyers. Different lenders. Same root problem. A pre-approval that never should’ve been issued . A Real Scenario Realtors Are Seeing More Often A buyer submits what looks like a strong offer. The pre-approval checks the box. Everyone moves forward. But once the file is examined: Less than two years of work history Variable income only (hourly, commission, fluctuating pay) Prior history? Straight out of high school This doesn’t mean the buyer can’t qualify. It does mean the file requires precision , not assumptions. The Truth About Pre-Approvals (This Is the Part That Matters) A pre-approval is only as strong as : the income used to qualify it the guidelines actually followed and the lender who understands the difference between “maybe” and “mortgageable” Variable income + limited history isn’t impossible — but it requires structure, documentation, and time . What it does not tolerate is shortcuts, guesswork, or optimism disguised as confidence. Where Deals Start to Break Many weak pre-approvals rely on: Income that hasn’t been averaged long enough Pay that looks good on paper but doesn’t meet guideline requirements Front-end approvals that haven’t been reviewed by underwriting Everything looks fine—until underwriting gets involved. And underwriting always gets involved. What Buyer’s Agents Should Be Asking (Without Playing Underwriter) You don’t need to know every lending rule. You do need to ask smarter questions. 1. Is the buyer’s income salaried or variable? If it’s variable, averaging and seasoning rules apply. 2. How much of that income is actually being used to qualify? Not projected income. Not potential income. Qualified income. 3. Does the buyer meet the full two-year work history requirement? If not, how is the gap being documented and justified? 4. Has an underwriter reviewed this income yet—or is this a front-end pre-approval? This affects how much risk the seller is taking on. 5. What’s the backup plan if income is reduced or disallowed? Strong lenders already know the answer. If those answers aren’t clear, the offer isn’t strong—no matter the price. Why This Matters for Sellers When a seller accepts a shaky offer: The home comes off the market Showings stop Leverage disappears If the deal collapses late, sellers lose time, momentum, and often negotiating power. A strong offer isn’t just about price. It’s about: financing that survives underwriting a lender who answers the phone and a buyer who is truly qualified The Realtor Takeaway Trust is important. Verification is smarter. The best agents don’t just get contracts signed—they get them closed . Ask better questions. Vet the lender. And remember: hope is not a lending strategy. Book time to chat My Calendar Theresa Rolen, Loan Originator NMLS# 2249004 | Brokerage NMLS #1850081 Cell 913-705-0049 Email Theresa@SummitLendingUSA.com Theresa Rolen Cell (913) 705-0049 Trolen.myjourney@outlook.com