What is private mortgage insurance (PMI)?

Private mortgage insurance (PMI) is a form of insurance required by the state of Washington when a borrower has less than a 20% downpayment on their home loan. PMI protects the lender in case the borrower defaults on the loan. PMI is usually paid in monthly installments, although it can sometimes be a one-time payment. In Washington, it is the responsibility of the borrower to pay for the PMI. The cost of PMI can vary depending on the type of loan and the amount of the borrower’s downpayment. Generally, the lower the borrower’s downpayment, the more expensive the PMI will be. Borrowers may be able to negotiate a lower PMI rate with their lender. If a borrower is able to make a larger downpayment, they may also be able to reduce their PMI rate. Additionally, borrowers can reduce their PMI rates by getting a higher credit score or taking out a loan with a longer repayment term. PMI is a way for borrowers to make a smaller downpayment and still purchase a home. However, it is important for borrowers to understand the cost associated with PMI and how they can reduce it if they chose to do so.

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What is private mortgage insurance (PMI)?

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