Mortgage Insurance (often called MI or PMI) is insurance that protects the lender in case you default on your loan. It usually adds an extra cost to your monthly mortgage payment. PMI is Private Mortgage Insurance – mortgage insurance on conventional loans rather than government (FHA, VA, USDA backed loans).
- MI is not homeowners insurance – it does not protect you or your house
- It is required when you buy a home with a down payment that is less than 20%
- You can avoid paying mortgage insurance by making a large enough down payment (usually 20% or more of the purchase price)
Another option is to get a piggyback loan, which is a second mortgage that covers part of your down payment.
- This way, if you only have 10% for the down payment, the first mortgage can be 80% (MI not required) and the 2nd can cover the remaining 10%.
You can also try to cancel your mortgage insurance once you have enough equity in your home. Depending on your loan type and lender, you may be able to request cancellation when your loan-to-value ratio reaches 80% or lower.
Still have questions about MI? Great – we like answering questions!
- Call us at 503.661.5580 or
- Submit a question on our Contact Us page or
- Email us at info@stone-bridge.com
