PMI (Private Mortgage Insurance)
Financial term in the Real Estate category
Definition
Insurance required by lenders when down payment is less than 20% of home value. Protects the lender if you default, typically costs 0.5-1% of loan amount annually.
Related Terms
Down Payment
An upfront payment made when purchasing a large item, typically expressed as a percentage of the total cost. Common for home purchases (usually 3-20%) and auto loans.
Mortgage
A loan used to purchase real estate where the property serves as collateral. The borrower makes regular payments over a set term (typically 15-30 years) until the loan is paid off.
Frequently Asked Questions
What is PMI (Private Mortgage Insurance)?
Insurance required by lenders when down payment is less than 20% of home value. Protects the lender if you default, typically costs 0.5-1% of loan amount annually.
Why is PMI (Private Mortgage Insurance) important in personal finance?
PMI (Private Mortgage Insurance) is an important real estate concept that helps individuals make better financial decisions. Understanding PMI (Private Mortgage Insurance) can improve your financial planning and help you achieve your money goals.
How does PMI (Private Mortgage Insurance) relate to Down Payment?
PMI (Private Mortgage Insurance) and Down Payment are related financial concepts. An upfront payment made when purchasing a large item, typically expressed as a percentage of the total cost. Common for home purchases (usually 3-20%) and auto loans.
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