What Is Private Mortgage Insurance (PMI) And Why Do I Pay It?

A common question I get asked is: What Is Private Mortgage Insurance (PMI) And Why Do I Pay It?

Definition: Private mortgage insurance, also called PMI, is a type of mortgage insurance you might be required to pay for if you have a conventional loan. Like other kinds of mortgage insurance, PMI protects the lender—not you—if you stop making payments on your loan.

If your down payment is less than 20% of the Appraised Value you will most likely have to pay Mortgage Insurance.

One way to get rid of PMI is to simply take the purchase price of the home and multiply it by 80%. Then pay your mortgage down to that amount. Once you pay the loan down, you can have the PMI removed.

Listen to our podcast on:

Thomas & Webber
514 Williamson Rd.
STE. #431
Mooresville, NC 28117

704.663.1600

Real Estate Attorney Mooresville, NC
Closing Attorney Mooresville, NC
Ben Thomas - Real Estate Lawyer 31 years
Tiffany Webber- Real Estate Lawyer 5 years
Helping clients handle both residential and commercial real estate closings in Mooresville, NC.

[florentinequack]

Thank you for sharing your knowledge. If I have an FHA loan, my homeowners insurance was canceled/non-renewable due to Gulf Coast hurricane impacts, and I lost my home in a flood or fire, how does PMI affect my loan? Given I don’t have 20% equity.

[jessemantyh]

Hi my wife and I have a real basic question we can't seem to find an answer for. We're about to buy a home together and are wondering what happens if one of us was to lose their job or become incapacitated?? Would that be mortgage insurance? Or homeowners insurance?

[brandondebose]

My mortgage underwriter told me that PMI is based off the SELLING price, NOT the initial "appraised value" of the loan. is this corrected or are they incentivized for selling PMI and he told me incorrect ? Im in SC if that matters

[simaabedini]

Can you please explain all different type of loans. What is MIP 😌👋🙁

[theengineer]

I should be happy that after I’ve paid 80% of my loan that I’m not paying for PMI any longer? So basically in order for anyone to not have to deal with PMI is to put down 21% of the cost of the property?

[Gur]

Please assist Ironland! 🗽
Our Ironland Monument would reward you handsomely for your contribution to our great Nation!

[BrowneNorton-hu]

Hernandez Joseph Miller Laura Martin Mary

[WebsterMildred-rr]

Brown Timothy Rodriguez Brian Moore Charles

[ghostpepera]

So the bank loans are "gaurenteed' little to no risk. And I gotta pay interest to borrow money? If my credit is bad interest is higher. So A.) why do I pay interest or why don't I get a better interest rate since PMI cuts the banks risk. And they don't even pay for that risk mitigation! I pay for it. It's a free insurance policy to them.
B.) why does my credit matter if I'm insuraning the loan? Good credit bad credit, the risk doesn't change you're insurance no matter what? There needs to be RICO charges out on these lenders. Young Thug's under indictment but these lending institutions are the real criminals. The pushers, the pimps omg. I GOTTA PAY THE PREMIUM BUT I'M THE BENEFACTOR IN ANY WAY? That's my like paying child support on a kid that's not mine. Wtf!

[SonmerfieldWendell-eq]

Jones Donna Walker George Thompson Gary

[LisaRamos-ys]

Williams Gary Rodriguez Eric Harris Larry

[TeslaBoy]

Why we pay bcz banks are smart to protect their $$$ and obviously constumer pay for to protect bank $$%

[MarcellaRomero-vszv]

Brown Patricia Lee Christopher Jones John