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# How do I add Private Mortgage Insurance (PMI)?

PMI is available for installment and fixed rate amortized balloon/balloon transactions. For construction with permanent financing, the PMI applies to the permanent financing portion of the transaction and will begin from the start of the second phase.

PMI coverage types of Level Balance or Declining Balance are supported.

- Level Balance - The PMI payment amount is based on the original amount of the transaction and remains the same throughout the transaction repayment period.
- Declining Balance - The PMI payment amount is based on the outstanding balance. As the borrower pays down the loan, the PMI payment amount will decrease accordingly.

The PMI types of Renewals Only and Renewals with Prepaid are supported. By selecting the option of Renewals Only, you have the ability to complete the data needed for the number of years and rate for up to three tiers of the PMI table. Selecting Renewals with Prepaid will allow you to define the number of years and rates for the PMI rate type and to enter a number of PMI payments to be prepaid for the transaction.

When prepaid PMI is associated with the loan, the prepaid PMI total is based on the number of payments entered and the rate in the first row of the PMI table. Clicking Calculate will automatically generate a Mortgage Insurance fee for you and will be visible in the Fees section above the Mortgage Insurance and will reflect the Collect As and POC settings made in the Prepaid PMI section. If a change to the PMI prepaid amount is required, you must update the information in the Mortgage Insurance section.

Escrowed PMI is incorporated into the transaction with both PMI type selections. In the Property Costs section, Escrow Account Type will be limited to the Escrow account established and required, and an escrowed property cost of Mortgage Insurance will be included in the table. The payment frequency in the Escrow PMI section reflects whether the mortgage insurance premium is payable to the PMI provider on an annual or monthly basis.

When you select that the mortgage insurance premium is payable to the agency on an annual basis, the payment date for the mortgage insurance escrow item in the Property Costs disbursement table will reflect a date that is one year from the funding date of the transaction. When the timing of the disbursement requires that reserves be deposited with lender at closing to cover the upcoming item, ComplianceOne mortgage will automatically calculate the number of payments, payment and total amount and create an item within the Reserves Deposited with Lender table. In addition, an individual fee will be created for that PMI escrow item in the Fees section which will reflect the total of that fee and other applicable information. As with the PMI prepaid fee noted above, if a change to the PMI escrow amount is required, you must update the information in the Mortgage Insurance or Escrow section as the details of the fee will be read-only.

Also, you must indicate whether you prefer the PMI renewal payments that are held in escrow to be applied to the payment stream through the final termination point or will be refunded separately to the borrower. If the escrowed PMI is refunded separately, the term of the cutoff will not be credited by the number of months escrowed.

Click Calculate to see updated values based on changes made to PMI prepaid or PMI escrow sections.

The lesser of the Sales Price and the Appraisal Value will be used to calculate the Loan to Value which is used to determine when the PMI will be cancelled and terminated.