What is PMI (Private Mortgage Insurance)?
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If you make a down payment of less than 20% of the purchase price of the home, mortgage lenders generally require that you take out Private Mortgage Insurance (PMI) that protects the lender incase you default on your mortgage. You may need to pay up to a year's worth of premium for this coverage at closing, which can amount to as much as several hundred dollars. One obvious way to avoid this extra cost is to make a 20% down payment. |
Common Home Loan QuestionsWhat are points? Should I pay points to reduce my rate? What is an APR? Should I lock in my interest rate? How is my credit score used? How can I improve my credit score? What is an appraisal? What is PMI? What happens at closing? |
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