is PMI ?
referred to as a Private Mortgage Insurance,
e.g. If you make
a down payment of less than 20% of the
purchase price of the home, mortgage lenders
generally require that you take out Private
Mortgage Insurance (PMI) that protects the
lender incase you default on your mortgage.
You may need to pay up to a year’s worth of
premium for this coverage at closing, which
can amount to as much as several hundred
One obvious way to avoid this extra
cost is to make a 20% down payment. There are
also other ways to eliminate PMI such as
80-10-10 financing which is further described
in this section.