Mortgage insurance (MI), often referred to as private mortgage insurance (PMI), has long been misunderstood. For many borrowers, it’s a source of anxiety—an added cost they’d rather avoid. But what if we reframed the conversation… What if MI wasn’t just a fee, but a financial tool that unlocks opportunity?
David Showalter, Sales Account Manager at Enact, explores how MI empowers borrowers, accelerates homeownership, and supports long-term wealth creation.
The misconceptions holding borrowers back
Many times, opinions about mortgage insurance are shaped by word-of-mouth stories, or discussions with family or friends who may have previously experienced higher MI costs due to lower credit scores. As a result, these stories or past experiences can influence the perspectives shared by your homebuyers in the present.
These experiences, while valid, don’t reflect the current landscape. Over the past decade, MI has evolved significantly. Risk-based pricing now rewards borrowers with strong credit profiles, offering surprisingly affordable rates. Prospective homebuyers might be pleasantly surprised to learn that mortgage insurance premiums may be lower than expected.
Advantages of mortgage insurance
Being overly focused on the cost of MI can cause many individuals to lose sight of the long-term financial benefits that mortgage insurance offers, both in obtaining homeownership and the long game of wealth creation. Let’s examine a few of these advantages so you can have better conversations with your borrowers.
MI as a gateway to homeownership
One of MI’s most powerful benefits is its ability to expand access to homeownership. Consider this:
- The average U.S. home price in 2025 is $368,581, according to Zillow.
- Without MI, a 20% down payment would require $73,716.
- With MI, borrowers can purchase the same home with just 3% ($11,057) or 5% ($18,429) down.
Expediting homeownership is a huge benefit for many borrowers. At $300 a month, it would take about 20 years to save $73,716. Not only that, but the house that was originally $368,581 is now significantly more expensive with home price appreciation occurring over time. Home prices continue to rise daily in today’s mortgage marketplace. But MI can be the key to help borrowers enter the market now—before prices climb further—and start building equity immediately.
Building wealth through appreciation
Mortgage insurance enables long-term wealth building for these same 3% and 5% downpayment borrowers. That’s why homeownership isn’t just about having a place to live—it’s a wealth-building strategy.
According to Case-Shiller, U.S. home prices have appreciated at an average rate of 4.9% annually over the past 25 years.
That means:
- A $368,581 home purchased in 2025 could be worth $594,686 in 2035, if home price appreciation continued at the same average pace.
- That’s a potential $226,105 in appreciation and doesn’t even include the additional equity gained through mortgage principal repayment.
MI is a useful tool to help borrowers start this journey sooner, turning a modest down payment into a long-term financial asset.
The opportunity cost of avoiding MI
Mortgage insurance can also be viewed as an “opportunity cost” for borrowers who are considering a 20% downpayment to avoid MI. But this strategy and waiting game may ultimately limit their financial flexibility.
For example:
- A borrower could put down 10% and invest the other 10% in the S&P 500.
- With an average annual return of 11.3%, according to SoFi, that investment in the S&P 500 could grow by $62,000 over 10 years.
- Even after paying $116/month in MI on that same $368,581 home as we described before, the borrower comes out ahead.
Mortgage insurance isn’t just a cost—it’s a strategic choice that can free up capital for other wealth-building opportunities for borrowers.
Advisors, not just lenders
As a loan officer or mortgage professional, one of the most powerful ways you can become the lender of choice in your lending footprint is to help borrowers re-think their view of MI. Instead of seeing it as a punitive outbound cost that only safeguards investors, true advisors use financial data and scenarios to help reframe the conversation, to leave borrowers with a true “wow” experience. Doing this will have your borrowers proactively pointing their family and friends in your direction, helping build trust and referral business. After all, when borrowers feel empowered, they become your biggest advocates. That’s what your personal success as a loan officer is built on.
Other ways we at Enact can help
Mortgage insurance is more than a monthly line item—it’s a bridge to homeownership, a catalyst for wealth, and a smart financial strategy. Let’s help borrowers see the full picture.
We’re committed to providing lenders with actionable insights and responsive support, as every borrower’s situation is unique. Enact offers a suite of tools—including Rate Express®, Underwriting Guidelines, and training resources to help you along the mortgage origination journey. If you ever need assistance, reach out to your local Enact Regional Underwriter, Sales Representative, or contact our ActionCenter®. They’ll be happy to meet your business needs and point you in the right direction.
Source: David Showalter is a Sales Account Manager at Enact Mortgage Insurance.
The statements in this article are solely the opinions of David Showalter and do not necessarily reflect the views of Enact or its management. The information and hypothetical scenarios in this article are not intended to constitute financial or legal advice.
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