What is a private mortgage insurance?

Private Mortgage Insurance (PMI) is a type of insurance that is required by lenders when a borrower makes a down payment of less than 20% of the purchase price of a home. PMI is an extra layer of protection for the lender in case the borrower defaults on the loan. It is the responsibility of the borrower to obtain PMI, which is paid for in monthly installments for the duration of the loan. PMI is considered a necessary expense for those who do not have a 20% down payment, as lenders may not be willing to take the risk of lending to someone with less of a financial stake in the property. The premiums for the insurance are usually added onto the mortgage payment by the borrower. In Delaware, the PMI premiums are regulated by the Department of Insurance, who sets the rates and keeps an eye out for any predatory practices from the lenders. The regulations are also in place to ensure that the insurers are financially responsible and that the consumer rights are being protected. For borrowers in Delaware, understanding the rules and regulations around PMI is important when considering homeownership and taking out a mortgage. Borrowers should also shop around for the best rates and terms and always read the fine print.

Related FAQs

What is an option to purchase?
What is a title insurance policy?
What rights do I have when buying a home?
What is a Warranty Deed?
What happens if I breach a contract?
What constitutes a valid real estate contract?
What is the difference between a realtor and a real estate agent?
What is an FHA loan?
What are the different types of mortgages?
What is a quit claim deed?

What is a private mortgage insurance?

Related FAQs

Related Blog Posts