An insurance policy that a home buyer must buy if the down payment is less than 20 percent of the purchase price. The mortgage insurance is payable to the mortgage lender in the event that the buyer defaults on the mortgage, and is paid monthly as part of the mortgage payment. The purchaser has no option to decline the insurance. However, new federal legislation compels mortgage lenders to cancel the PMI after two years if the equity in the house rises above 20 percent, or in some cases 25 percent, and if payments have been made on time. PMI payments aren’t deductible from income tax.
Private-mortgage-insurance Sentence Examples
Borrowing more than 80% of the home's value will subject the borrowing more than 80% of the home's value will subject the borrower to private mortgage insurance.
It should be noted however, that if you borrow more than 80 percent of the value, you may be required to pay for private mortgage insurance.
For those homeowners who are unqualified for traditional loans, either because they are unable to afford private mortgage insurance or for other reasons, there are government programs which can help.
You may also encounter additional monthly charges such as Private Mortgage Insurance (PMI).
Payments for private mortgage insurance - Lenders usually require a borrower to have private mortgage insurance if their down payment is less than 20% of the purchase price, unless the mortgage is guaranteed by FHA or the VA.