Homebuyer Asks “What Is PMI?”

PMI is Private Mortgage Insurance which is a safeguard for the lender when the home buyer does not have 20% to put down on a house.  Since most home buyers don’t have 20% down but instead put down 3.5% or 10%, this leaves the lender a little insecure in case the borrower defaults so they require PMI until such time as there is enough equity in the home.

It can take several years to obtain enough equity to have the PMI removed. When real estate values start increasing it will be at a slow rate so this could possibly take 10-15 years before you see enough equity to have your PMI removed.

And of course, if homebuyers have 20% to put down on a loan, then there is no PMI.  Always check with your mortgage broker/lender and ask about PMI to get the scoop on whether you will pay PMI.

If you are ready to get started finding your next home, be sure to look at all the homes for sale in and around Sacramento at Sacramento Real Estate Neighborhoods.com and give me a call.

In the meantime, have a SAFE and FUN holiday weekend and see you back here, on Sacramento REAL Estate Voice.