Private Mortgage Insurance – What is it and why do I have to pay for it?
Private Mortgage Insurance (PMI) is a form of insurance designed to protect mortage lenders against financial losses due to foreclosure. Please do not confuse PMI with Credit Life or Credit Disability Insurance, which is designed to pay off your mortgage in the event of one’s loss of employment due to injury or the death of a spouse. PMI allows you to purchase a new home with less than a 20% down payment. It allows mortgage lenders to accept lower down payments, and is an excellent avenue for getting into your dream home with limited funds available. Nearly half of all borrowers put less than 20% down when buying a home. PMI should be considered a short term expense due to the expected appreciation of your home. When your home increases in value over a period of time, and your mortgage balance lowers, you will have an increase in your home’s equity. PMI can be removed from your mortgage after the following criteria are followed: • The date the principal balance of your mortgage actuall
