Mortgage Insurance, also known as Private Mortgage Insurance (PMI) can add hundreds of dollars to your monthly payment amount with no benefit to you, the homeowner. Here are the basics you need to know about mortgage inurance whether you are purchasing your home or refinancing an existing loan.
Mortgage insurance is typically required if you have less than a 20% down payment or are taking out an FHA mortgage loan. This policy is separate from your homeowners insurance and can be paid upfront or on a monthly basis. The amount of your premiums depends on a number of factors including your loan to value ratio, credit history, and type of mortgage loan. If you are already paying for Private Mortgage Insurance you can have the policy cancelled once you reach 20% equity and have all your payments current.