What is PMI? (Hint: Private Mortgage Insurance)
So you’re purchasing real estate and notice something called PMI in your loan estimate – what gives? PMI or Private Mortgage Insurance is a monthly fee the lender collects when you finance less than 80% of the purchase price of residential real estate.
The only way to avoid PMI is by coming up with a down payment that’s at least 20% of your home’s purchase price. This can be extremely challenging, especially in a housing market like Portland, so think of PMI as something that allows you to finance a larger purchase as it insures lenders in case of your default. The good news is that when you have paid down 20% of your loan, this will disappear from your monthly obligation.
Hilary Contolini, Portland realtor