What is a private mortgage insurance?

Private mortgage insurance (PMI) is a type of insurance that protects the lender of a residential loan against any potential losses due to a borrower defaulting on their mortgage. The borrower is typically responsible for the payment of the PMI, and in most cases, the PMI is required for a loan amount that is greater than 80% of the value of the property. PMI is designed to protect the lender’s interests in the event of a default, so the bank can avoid any substantial losses. In New York, PMI can be purchased by either the lender or the borrower. It is important to note that the purchase of PMI does not eliminate the risk of default; it only provides the lender with protection against some of the potential losses. PMI typically cost between 0.3-1.5% of the loan amount (paid annually) and can be reduced or cancelled once the borrower has paid down the loan to 80% equity or less. There have been some legislative changes that may provide some relief to borrowers in New York with PMI, such as reducing the amount of PMI if the borrower is making timely payments or eliminating PMI if the borrower is able to pay off the loan to 78% equity. Overall, PMI is a type of insurance that helps to protect the lender of a residential loan against default losses. It is important for borrowers to understand their liabilities when it comes to PMI and the potential benefits they may be eligible for.

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What is a private mortgage insurance?

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