If you are looking to buy a home but are putting in less than a 20% down payment, you’ll likely be paying PMI or Private Mortgage Insurance.
PMI is essentially an additional payment as part of your mortgage that acts as insurance for the lender of a mortgage if the borrower stops paying back their loan.
PMI may be required when you’re purchasing a house or refinancing your mortgage. In addition, PMI is required on certain loans if your down payment is less than 20% and your loan-to-value ratio is over 80%.
If you do need to pay PMI, your lender, not you, will choose the provider of the PMI. As a result, PMI rates may vary.
PMI payments can be paid in a few ways depending on PMI type. Your lender may let you choose how you pay your PMI, and others will make that decision for you.
BPMI is an extra payment you make each month in addition to your regular mortgage payment. You can request to have it canceled once you’ve hit the 20% equity mark.