If you’re buying a home with less than 20 percent down, your lender will require you to buy private mortgage insurance. There’s only one exception to that rule: If you’re using a VA loan, you don’t need to buy private mortgage insurance, or PMI.
What is PMI?
PMI is a type of insurance that lenders require you to buy if you put down less than 20 percent of a home’s purchase price as a down payment. It’s not insurance for you, though – it insures your lender so that the lender’s investment is covered in the event that you don’t pay your mortgage payments.
You can’t shop around for PMI; your lender will choose the coverage for you.
When Can You Stop Paying PMI?
You can generally stop paying for private mortgage insurance when you have accrued 20 percent equity in your home. That means if you buy a home for $100,000, you can stop paying PMI when you only owe $80,000 on the principal.
Some lenders automatically cancel PMI, but others require you to call so they can evaluate your account.
Are You Buying a Home or Farmland in North Florida?
If you’re moving to Lake City, we can help you find the perfect place to live. Call us at 386-243-0124 to tell us what you want from your home and we will begin searching right away.
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