Private mortgage insurance (PMI) is a term many Santa Cruz home owners have heard but few understand. Unfortunately, even more home owners have paid PMI premiums long after it was needed because they didn't know they could cancel.
Here are answers to questions I am most frequently asked about PMI:
What is Private Mortgage Insurance (PMI)?
As its name states, PMI is insurance. Like all insurance, it protects someone against the loss of something. For example, car insurance protects the car owner against the loss of his car. In this case, PMI protects lenders against the loss of their money if borrowers fail to repay their mortgage.
If you buy a house and make a down payment of less than 20%, lenders require that you pay for PMI insurance. Let’s…