If you put less than 20% down payment on a mortgage in America, you will be required to pay for Private Mortgage Insurance (PMI). This is an insurance policy that protects THE INVESTOR against YOUR DEFAULT in the event you walk away from your mortgage. What PMI is not is an insurance policy that will kick in if you lose your job or don't have money to pay your monthly payment. This is important to note. Mortgages that have low down payments are considered higher risk mortgages because the borrower doesn't have a lot of skin in the game, i.e. down payment. They are more likely to be foreclosed upon because of that. In order to get investors to invest in these higher risk mortgages, they are coupled with the PMI policy. That way, if there is default, the investor will be able to recoup more of their loss.

I always thought the Mortgage Insurance cost was the same across investors but that is simply not the case. When I am comparing investors, I not only look at the interest rate available but I compare mortgage insurance premiums. For example, on a purchase of a primary residence with 3% down, the mortgage insurance premium is $507.55/month with one investor vs. $167.32 with another lender, both offering the same rate. That is a difference of $340.23/month!!! The less expensive investor is able to offer lower PMI because they have undergone the expense of getting their Underwriters certified to underwrite not only the mortgage but the mortgage insurance as well. The higher PMI lenders have to package the file and send it to the PMI provider for THEIR Underwriters to review before approval. This is a time suck and EXPENSIVE! 

As your mortgage broker, I am constantly looking for less expensive ways to finance your home. That is on new mortgages and existing mortgages I have written for you! I have your back in managing this long term investment. Please let me know if you have any questions!!