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Frequently Asked Questions
Private Mortgage Insurance (PMI)
- What is it and why is it required?
Private mortgage insurance (PMI) is insurance
underwritten by a private company that protects
the lender from losses should the borrower default
on the mortgage. PMI is required on most loans when
a down payment of less than 20% is applied to the
mortgage. Borrowers are required to pay the premium
for the private mortgage insurance as a part of their
monthly mortgage payment.
- What is the minimum down payment required by a
lender in order to eliminate PMI?
On a primary residence, the minimum that you need to put down
to eliminate PMI is 20%. If you are putting down less than
this, but wish to avoid PMI, speak with your lender to see
if you qualify for any other alternative programs.
- How much does mortgage insurance cost?
The cost of PMI is divided into two parts. The first part
is a payment made at the time of closing. The second is an
ongoing payment made each month with your principal and
interest payment.
- Do lenders offer any alternative to mortgage insurance?
Yes, you have other options. Talk with your lender
about the alternatives offered by their company that
may benefit your financial needs.
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All information contained herein is believed accurate, but not warranted. Subject to errors, omissions, change, and withdrawal without notice
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