what is pmi

The term PMI, or Private Mortgage Insurance, is a common term you might hear often in the mortgage industry. This type of mortgage loan insurance is placed on a mortgage loan if a buyer does not put down at least a 20% for a down payment. The same applies for someone who is looking to refinance their current mortgage loan. If there is not at least 20% equity in the home, a lender will also require you to obtain PMI on your loan.

A private mortgage insurance policy protects your lender should you default on the mortgage payments. As a borrower of the loan, you pay the premiums and the lender is the beneficiary.