Private Mortgage Insurance (PMI) is an insurance policy which makes homeownership possible for home buyers who don’t want to make a 20 percent down payment. You, the borrower, pay PMI premiums to protect your mortgage lender from default and foreclosure.
Should you fail to repay your mortgage, the lender can “cash in” the homeowner’s PMI policy to recover its lost money. Conforming mortgage lenders require PMI when the home buyer makes a down payment of less than 20 percent.
PMI later self-cancels when the balance drops to 78 percent of the initial sales price. You can also apply with your servicer to remove it once the loan balance drops to 80 percent. (You may have to pay for an appraisal or refinance altogether to get this benefit).
The information contained on this website is for informational purposes only and is not an advertisement for products . The views and opinions expressed herein are those of the author and do not reflect the policy or position of Brokerage. Source: The Mortgage Reports