Ask Mike! »  Private Mortgage Ins.

Q: Why does my mortgage include Private Mortgage Insurance?

A: Private Mortgage Insurance (PMI) is insurance that lenders require for loans that are written for more than 80% of a home's value. PMI protects the lender if a default should occur and enables homebuyers with down payments of less than 20% to purchase a home.

The cost of PMI varies depending on the loan amount to the home's value and the type of mortgage. Most lenders will remove the PMI requirement once the home's value is more than 80% of the loan balance, but it is up to the home owner to notify the lender.