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How to explain PMI to your clients
We often get asked lots of questions by first time homebuyers about all the acronyms that get thrown around by lenders when preparing an offer.
For one example, what is PMI?
Basically, it’s a protection for a lender. When your down payment is less than 20%, you usually have to pay for Private Mortgage Insurance, (PMI), which is the lenders’ (banks’) protection in the event that you default on your primary mortgage and no longer make payments and the home ends up going into foreclosure.
Paying private mortgage insurance is often a necessary cost if you want to purchase a home without a significant down payment, but you need to understand the terms of your current mortgage contract and calculate your loan to value ratio to avoid paying it longer than absolutely necessary.
Knowing when and how to remove PMI will lower your monthly mortgage bill. Follow the tips below and the next time you apply for a mortgage, make sure you understand the PMI rules and ask for clarification before signing.
Does everyone need to pay it?
Private mortgage insurance is an actual insurance policy issued by an insurance company that benefits your lender.Essentially, your lender is requiring you to pay the premiums for an insurance ... more

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