Private Mortgage Insurance (PMI)
Lenders mortgage insurance (LMI), also known as private mortgage insurance (PMI) in the US, is insurance payable to a lender or trustee for a pool of securities that may be required when taking out a mortgage loan. It is insurance to offset losses in the case where a mortgagor is not able to repay the loan and the lender is not able to recover its costs after foreclosure and sale of the mortgaged property.
Mortgage lenders make many borrowers purchase mortgage insurance to protect the lender if the borrower is unable to pay the mortgage. In other words, mortgage insurance guarantees your lender will get paid if you default. When getting mortgage insurance, this allows you to purchase a home before having the full 20 percent down payment saved up which is a benefit for borrower.
As low as 3.5% down payment borrower need to pay PMI as long as mortgage life.
As low as 5% down payment borrower need to pay PMI until borrower reach 20% ownership.
As low as 20% down payment borrower no need to pay PMI.