Posted 20 days ago A brief description of PMI PMI, or private mortgage insurance, is a lender's protection in the event that you default on your primary mortgage leading to foreclosure on your home. Lenders typically require a down payment equal to 20% (or greater) of a property's purchase price when borrowers apply for a home loan. If a borrower is unable to afford that amount (or chooses otherwise), a lender will typically look at the loan as a riskier investment. In which case they will require that the borrower take out PMI. PMI may cost between 0.5% and 2% of the entire loan amount annually and is usually included in the borrower's monthly mortgage payment. However, there are annual and one-time payment methods as well! For example, say you had a 1% PMI fee on a $150,000 loan. The fee would add approximately $1,500 a year, or $125 each month, to the cost of your mortgage. If your lender allows it, you may be able to do a one-time charge of 3-5% of the loan amount at closing. If the mortgage insurance was financed at the time of origination and is canceled prior to its maturity you may be entitled to a REFUND if the refundable option was chosen at time of origination. However, if there is no refund/limited option, this would negate any option for a refund. Talk to your lender and see if you can get REFUNDED the PMI payments when you reach the correct loan to value (LTV) ratio! When your loan reaches an 80% LTV, you can request that your mortgage insurance be cancelled; this must be in writing. However, cancellation at this point is still done on a voluntary basis by the lender. It's not legally required until the 78% pay down level is reached! Private mortgage insurance should not be confused with credit life insurance; it will not pay your mortgage each month should you become disabled, unemployed or deceased, and pays nothing to you or any of your beneficiaries. And remember PMI has been tax-deductible since 2007 and, by an extension voted by Congress, it is also in 2018. Looking to grow and gain experience in my journey of real estate blogging, so constructive criticism and feedback is encouraged!