Today, we link to a post from DoorFly.com addressing the private mortgage insurance. [see post here]. DoorFly.com's cite is: http://blog.doorfly.com/. The post explains what private mortgage insurance is:
Abbreviated PMI, private mortgage insurance is an added policy that protects lenders. This is required in a majority of cases where the borrower is unable to come up with a full 20% down payment on a property. The policy protects the lender from loss that can occur in the event the borrower defaults on the mortgage loan.
The premium is paid monthly above and beyond your monthly mortgage payment. This is why it is important to factor in the additional monthly cost when you consider the affordability of a property if you don’t have at least a 20% down payment.
The post also explains the necessity of private mortgage insurance for some homebuyers:
PMI seems like a bad deal for the borrowers at first glance, since it does protect the lender and not the borrower. The reality is that coming up with a 20% down payment on a home can take years, especially if you are paying a high rent. With PMI, you can own a home with a five percent or less down payment, when many lenders would otherwise turn you down. It reduces the risk factor related to a low down payment situation, and therefore increases your approval chances on a more expensive home.
Thanks to DoorFly.com for sharing its informative explanation on private mortgage insurance.
