Understanding PMI Appraisals: What You Need to Know
Hey there, Montgomery County homeowners! Today, we’re diving into the world of PMI appraisals . If you’ve ever taken out a mortgage, you might have heard the term "PMI" thrown around. But what exactly is PMI, why is it required, and how can you get rid of it? Let's break it down! What is PMI? PMI stands for Private Mortgage Insurance. It’s an insurance policy that protects the lender if you default on your mortgage. Lenders typically require PMI if your down payment is less than 20% of the home’s purchase price. It’s important to note that PMI protects the lender, not the borrower, but it’s the borrower who pays for it. Why is PMI Required? Lenders require PMI as a way to mitigate risk. When a borrower makes a down payment of less than 20%, the lender is taking on more risk. PMI helps protect the lender in case the borrower is unable to make their mortgage payments. It’s a common requirement for conventional loans with low down payments. Types of Loans That Require PMI 1....