Frequently Asked Questions

Should I consider a loan with private mortgage insurance (PMI)?

Private Mortgage Insurance (PMI) makes it possible for you to buy a home with less than a 20% down payment by protecting the lender against the additional risk associated with low down payment lending. The PMI insurance premium is based on the loan-to-value ratio and other factors such as credit score and is included in your monthly payment.

Federal regulations require that PMI be automatically cancelled when your loan balance reaches 78% of the original property value at the time the loan was secured. On conventional conforming financing, you may request that PMI be removed sooner, based on an increase in the property value as determined by a new appraisal to be ordered by the servicer.

Considering putting less than 20% down: if you prefer to hold onto some down payment funds for remodeling, PMI can be an easy solution to putting less money down, depending on some factors like credit score and equity, it can be relatively affordable.

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