Unless you’re planning on putting twenty percent down on your mortgage loan, there’s this pesky little part of your monthly payment you’re going to need to know about…private mortgage insurance or “PMI.”
PMI is a type of insurance that protects lenders from the risk of default and then foreclosure. Buyers who are not able or who choose not to put down a signficant down payment (i.e. 20%), PMI is required by the lender so as to minimize the risk for the lender.
The good news is that you don’t have to pay PMI forever if you’ve chosen to put at least 5% down on your insured conventional mortgage. When your mortgage loan balance is scheduled to reach 78% of the original vlaue of your home, be sure to contact your lender to cancel the insurance, which reduces your monthly payment.
Be sure to discuss this with your lender while going through the mortgage loan process. An educated
homebuyer is a happy homeowner!
By Jill Curtis, talktotucker.com/jill.curtis