What is PMI?
PMI stands for Private Mortgage Insurance. This insurance is required if you make less than a 20% down payment or have less than 20% equity in your home. It is additional insurance designed to protect lenders from individuals who default on their loans. If you have less than 20% to put down, there are still options for avoiding PMI. Please inquire with your Blue Water Mortgage Loan Officer.
Private Mortgage Insurance (PMI) is required on conventional home loans with a loan to value ratio at closing exceeding 80%. This allows the borrower to acquire a loan with a lower interest rate. Note: Loan to Value (LTV) is the percentage relationship between the amount of the loan and the appraised value or sales price.
A. Private Mortgage Insurance is simply insurance that protects the lender if you don’t pay your loan. It’s required by the lender if your total loan exceeds 80% of the purchase price of a new home or property, or if you’re refinancing and the total you plan to borrow will be more than 80% of the property value. One way to avoid PMI costs is to make a down payment of 20% or opt for a piggyback loan.
