What is PMI?
PMI is a type of mortgage insurance policy that provides compensation by the insurance company to the Lender in the event a borrower defaults on the mortgage. PMI does not protect the borrower from having to pay the mortgage if they are unable to do so. It is an insurance policy only for the Lender and has no benefit to the borrower other than to allow a borrower who would not normally qualify for a mortgage to be approved for a mortgage. Typically, PMI is a monthly amount paid by the borrower with the mortgage payment or a one-time payment made by the borrower at closing. Sometimes, the bank will pay for the one-time payment option, but this is not common.
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