By info@shareamg.com 
Private mortgage insurance (PMI) is required for most borrowers who put down less than 20%. PMI helps make you a safer bet for lenders, even if your down payment is small.
Steps:
- Identify the home you are interested in.
- Calculate the standard 20 per cent down payment that most lenders require (multiply the house price by 0.2 to get the figure).
Determine how much money you can afford to use as a down payment. If it’s less than 20% of the home’s price, the lender will likely require you to get PMI (Private Mortgage Insurance).
Wait for the lender to handle the paperwork for PMI. You’ll sign the necessary documents when you close on the house.
- Ask the lender how much of the PMI premium you’ll need to pay at closing. The amount will depend on your credit, the house you’re buying, and your down payment.
Tips:
Private mortgage insurers deal directly with lenders, not homeowners. Most lenders partner with one or more insurers.
PMI premiums depend on your down payment and credit history. This insurance usually adds a few hundred dollars to your monthly loan costs, so include it in your budget if your down payment is less than 20%.
At closing, insurers often require several months of premiums upfront.
Since 1999, lenders must provide yearly notices explaining how to cancel PMI or stop the monthly payments.
If your mortgage is sold to Fannie Mae or Freddie Mac, you may be able to cancel PMI. A new appraisal showing 20% equity and on-time mortgage payments for 12 months increases your chances.
Warnings:
- Private mortgage insurance may be challenging to find if this is a second mortgage.
- Don’t mix up PMI with mortgage life insurance. PMI protects the lender if you default on the mortgage but offers no benefits if you die.
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