YOU ASK:

Is private mortgage insurance required for my mortgage?

WE ANSWER:

If you can pay for 20% down payment (that is, 20% of the purchase price of the house), you won't need to buy private mortgage insurance (PMI).

This insurance is only required by lenders if the borrower's down payment is less than 20%. There are, however, laws that limit the payments towards private mortgage insurance. Once you are able to meet the equity percentage requirement, private mortgage insurance is also no longer required.

In fact, lenders are obligated to cancel your private mortgage insurance once you reach a loan-to-value of 80%. This is based on your request to cancel the insurance.

This ruling is designed to protect lenders who invest by putting out the loan. People who are not able to pay 20% or more in down payments for the house are considered to have a higher risk of default, as opposed to those who have already saved up for and have 20% of the down payment.

The 20% mark is also thought to be a considerable amount, so much so that it would be less likely that the borrower will walk away from his loan when he has already given that amount in down payments and monthly mortgage payments or already has that amount as equity.

It is also beneficial to buyers since they can already buy a house even with a down payment that is less than 20%. What is important is that you should be on the lookout so that once you reach 20
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