all the other costs of buying a new house, most homeowners - especially
those just starting out - can expect to pay additional private
mortgage insurance, better known in the banking community as Private MI or PMI.
themselves, most banks will require that borrowers pay for PMI
if the home loan they take out is more than 80 percent of their home's
value. In short, buyers with less than a 20 percent down payment are normally required to pay PMI.
The main benefit
to consumers is that they don't have to wait to save for a large
down payment before they purchase their new home. Then, once the
mortgage is paid down to where their home equals less than 80
percent of the original purchase price - they can, under present
law, cancel their PMI payments.
mistakenly continue to pay for private mortgage insurance beyond the required time, new
regulations call for lenders to cancel PMI automatically once
the loan is sufficiently paid down.
As with all
most banking transactions, there are some caveats. Generally,
borrowers must in good standing when it comes to repaying their
mortgage loan, and their property must not have decreased in value
below the original purchase price in order to be eligible for
private MI cancellation.
On the Web,
find out more about the advantages of PMI and what it may cost
you, related questions to ask your lender, along with other expert
consumer guides including tips, advice, facts and information on
personal mortgage insurance...