What Is Private Mortgage Insurance?
Additional mortgage protection for low equity home buying
For home buyers who want to purchase a home but have a down payment of less than 20 percent of the home’s value, the mortgage lender may require private mortgage insurance (PMI).
Private mortgage insurance pays out to the mortgage lender, protecting that entity against loss if you, the borrower, default on the loan.
Because PMI is available to protect the lender, it enables borrowers with less cash to have greater access to homeownership.
Assuming the borrower has a good payment history, once the loan balance is paid down to 80 percent of the property value, lenders will often drop the PMI coverage requirement.
Note that the responsibility for keeping track of the loan balance generally falls to the borrower, so when your loan balance is paid down, be sure to request that the PMI requirement be dropped. If you fail to request that the lender drop the coverage, you may find yourself paying unnecessary premiums.
Contact us for all your insurance needs!
Buffalo Grove, Lincolnshire, Mundelein, and Vernon Hills residents, at R Hobbs Insurance Agency, we can work with you to make sure you’ve got the coverage you need, while at the same time using all possible credits and discounts to make that coverage affordable. Just give us a call at (847) 680-0888 or send us a note at [email protected]. We want to help you meet your goals, and make sure what’s important to you is protected!
Content source: iii.org