What is PMI?
If you make a down payment of less than 20% of the purchase price of the home,
mortgage lenders generally require that you take out Private Mortgage Insurance
(PMI) that protects the lender incase you default on your mortgage. You may
need to pay up to a year’s worth of premium for this coverage at closing,
which can amount to as much as several hundred dollars. One obvious way to avoid
this extra cost is to make a 20% down payment. There are also other ways to
eliminate PMI such as 80-10-10 financing which is further described in this