Purchasing a home with low or no down payment may sound attractive. However, in most cases it means agreeing to pay for mortgage insurance, which is financial protection for lenders if you default.
Mortgage insurance is one of many upfront and ongoing costs of purchasing a home with low down payment. In certain circumstances, mortgage insurance can be avoided or removed. In this article, we offer guidance about private mortgage insurance and how to deal with it.
What is private mortgage insurance?
Private mortgage insurance, or PMI, is an insurance policy paid by borrowers when taking out a mortgage loan. Unlike traditional insurance, which protects policyholders against losses, private mortgage insurance policies protect lenders instead. It is meant as a way to reduce risk and potential losses when borrowers default on their mortgages.