What is PMI
What is Private Mortgage Insurance
PMI is extra insurance that lenders require from most home buyers who obtain loans that are more than 80 percent of their new home’s value. In other words, buyers with less than a 20 percent down payment are normally required to pay PMI.
Why do homeowners get saddled with private mortgage insurance anyway? This is insurance for the lender that is now necessary because so many people defaulted on their mortgage loans.
In reality, PMI saves everyone money because without the security offered by this insurance, lenders would be far less likely to lend so much money at such low interest rates. After all, no lender likes high risk borrowers and folks who don’t have twenty percent to put down seem risky.
Plus, PMI is not forever. Once you have your twenty percent in your home you can refinance and PMI will go away, but your low interest rate won’t!
Other Real Estate Questions Answered
- What is a Credit Score?
- Who is FHA?
- What are Mortgage Rates at?
- How to Select a Mortgage Professional in Western New York
- Why you should pre-qualify for a mortgage before you start your WNY home search!
- How Buyers Can Save Money (and aggrevation) on their Home Purchase
Thinking of purchasing a WNY home? Interested in finding out the current market value of your single family home, condo or investment property? Then call Colleen Kulikowski at (716) 743-5297 to discuss what is happening in today’s Western New York Real Estate Market. View additional WNY Market Area Statistics here.
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