Did you know?
Primary mortgage insurance, or PMI, protects lenders in the event that borrowers default on their primary mortage by ceasing to make payments, resulting in homes ending up in foreclosure. But all borrowers do not have to pay PMI.
Typically, homebuyers must make a 20 percent down payment on a home when they buy it. However, some borrowers are unable to put down 20 percent. In such instances, the lender will require they pay PMI. This is because the lender views a borrower who cannot make an initial 20 percent down payment as a riskier investment, and lenders charge PMI in an effort to protect themselves should the borrower prove worthy of their skepticism.
PMI will be factored into the monthly mortgage payment, but borrowers should know they do not have to continue paying PMI once they have paid enough toward the principal amount of the loan. For most, this means once they have paid 20 percent of the principal, then they can ask that the monthly PMI payment be removed.
Many borrowers are unaware of this or even forget to ask, but it’s within their rights as borrowers and can save a substantial amount of money over the course of the mortgage loan.
This information was provided courtesy of MetroCreativeConnection.
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