You Ask, We Answer: What is Private Mortgage Insurance or ‘PMI’ and How Does It Work?
For many homeowners, their mortgage payment contains more than just principal and interest. A little something called PMI could be representing a significant portion of that payment, and it's important for home buyers to understand this cost. What Is PMI? PMI stands for private mortgage insurance, or sometimes just mortgage insurance. However, it isn't intended to mitigate risk for the homeowner, but rather the bank. Statistics show that when a home buyer puts less than 20% down on a home, he/she is much more likely to default. So, requiring these buyers to carry PMI helps the bank hedge their losses…