What is private mortgage insurance and will I need it?
Private mortgage insurance or PMI is required if your loan-to-value is greater than 80%. Loan to value is defined as the price versus the amount borrowed. For example, a $200,000 purchase where $160,000 was borrowed would be 80% loan to value. If your loan to value is above 80%, you may be required to pay private mortgage insurance. Private mortgage insurance protects the lender in event of foreclosure and is often waived by the lender when your loan to value dips below 80%. It is up to you to prove to the lender that this has happened. PMI is always required on government loans such as VA or FHA.
