Posted on: 28th Jun, 2012 01:36 am
I have 10% saved up for the down payment of my mortgage. My lender said if I give 10% down, then I will have to go for private mortgage insurance(pmi). What is that???
Hi Folmol,
Your lender is right in saying that you will have to go for private mortgage insurance as you're not paying 20% down payment. It is a policy which is provided by private mortgage insurers in order to protect the lenders against any loss if a borrower defaults on the mortgage payments. Most lenders require PMI for loans with loan-to-value (LTV) percentages in excess of 80%.
Take care
Your lender is right in saying that you will have to go for private mortgage insurance as you're not paying 20% down payment. It is a policy which is provided by private mortgage insurers in order to protect the lenders against any loss if a borrower defaults on the mortgage payments. Most lenders require PMI for loans with loan-to-value (LTV) percentages in excess of 80%.
Take care
Hi Folmol,
To know all about PMI, check out the given page:
http://www.mortgagefit.com/pmi.html
Thanks
To know all about PMI, check out the given page:
http://www.mortgagefit.com/pmi.html
Thanks
Private Mortgage Insurance (PMI) is an insurance that protects the lender against loss if the borrower defaults. The insurance is basically an additional cost to the borrower for the increased risk held by the lender. PMI does not benefit you as the borrower. It benefits your lender instead.
Private mortgage insurance offers security to the lenders against defaulting borrowers. If a borrower makes low down payment then he/she has to pay the private mortgage insurance to the lender.
PMI also known as Lenders mortgage insurance (LMI) is a insurance which given to the money lender where borrower is unable to repay the loan or he unable to recover it's cost.