Private Mortgage Insurance (PMI): What It Is, How It Works, and How to Get Rid of It
Key Takeaways: PMI is required on conventional loans with less than 20% down. It adds to your monthly costs but can be removed once you reach 20% equity. You can avoid PMI with a larger down payment, VA loan, or piggyback loan. If you’re buying a home and planning to put down less than 20%, chances are you’ve come across the term PMI. But what is it, why do you need it, and how much will it actually cost you? Whether you’re purchasing a home in Denver, CO or looking at homes for sale in Tampa, FL , understanding PMI is key to budgeting smart. In this Redfin article, we’ll break down everything you need to know about private mortgage insurance (PMI) – including how to avoid it or remove it when the time is right. What is private mortgage insurance (PMI)? PMI stands for private mortgage insurance . It’s a type of insurance that protects your lender, not you, if you stop making payments on your mortgage. Lenders require PMI on conventional loans whe...