What is PI (Private Mortgage Insurance)?
Private Mortgage Insurance (PMI) protects the mortgage lender from taking a financial loss on minimum-down loans if they are forced to foreclose on your home.Carrying PMI ensures that the debt is repaid if you default on the loan. If you make a down payment of 20% or more, you will not be required to purchase PMI to cover the lender’s risk. However, if you make a down payment of less than 20%, you will be required to pay for PMI.The PMI insurance rate is based on a sliding scale. The smaller your down payment, the higher the PMI rate. For example, if you are getting a $150,000 mortgage with 15% down payment, the PMI rate would be about $40 per month. If your down payment was 10%, the PMI rate for the same loan amount would be about $65 per month. And if your down payment were only 5%, the PMI rate for that loan amount would be about $98 per month. So you can see, that if you have the cash available, it is usually best to make a down payment of at least 20% of the purchase price in orde
