1. PMI is required on all conventional loans if down-payment is less than 20%
  2. It is mandatory insurance policy for conventional loans only
  3. It insures the lender against loss in the event the buyer default on their mortgage
  4. The cost is usually between 0.5% to 1% of the loan amount. Assuming a 1% fee, if you borrow $200,000 the PMI cost would be about $2000 a year, or about $167 a month.
  5. The payments can be added to your monthly mortgage payments
  6. The premium is paid by the borrower.
  7. You do have multiple payment options- the first option is the single premium, you make one lump sum payment at closing, which covers the policy for the life of the mortgage. Lender-paid is the next option, there are no monthly payments, however, the lender may raise your mortgage rate to offset the additional risk. The third and final option is making monthly payments that is collected with your mortgage payments.
  8. PMI helps first-time- home buyer who does not have 20% down payment, to purchase their first home.
  9. You can request to have PMI canceled once you have 20% equity in your home
  10. Once your loan balance reaches 78%, the mortgage company is required to eliminate PMI. Also, if an appraisal from the lender shows 20% home equity, you can request to have PMI removed as well. As always, I hope this information was helpful.