What is Private Mortgage Insurance (PMI)?
Private Mortgage Insurance (PMI) is the insurance you are required to pay if you have less than 20% equity in your home. This insurance protects the lender if you default on the loan and the lender must foreclose. The lender then uses the money collected from PMI to offset any losses. Once you achieve enough equity in your home, your lender may eliminate your PMI.
Private Mortgage Insurance is also known as PMI. On a conventional loan PMI is required if you borrow over 79.99% of the appraised value of the home. The insurance protects the lender against financial loss if the loan defaulted. PMI charges vary depending on the size of the down payment and the loan, but they typically amount to about one-half of one percent of the loan.
Private Mortgage Insurance. This is a monthly insurance premium (included in your monthly house payment) that you must pay if your initial mortgage loan amount is more that 80% of the value of your house. PMI insures the lender against your defaulting on the loan. (If you default, the lender would sell your house to pay off the loan. If they had to sell your house at a loss, PMI would make up the difference.
