Private Mortgage Insurance is an additional fee that you are required to pay each month, on top of your mortgage payment. The purpose of private mortgage insurance is to protect the lender in case the borrower defaults on the property. It does not have any beneficial reasons to the borrower, the monthly payment does not go towards the loan and it is not tax-deductible. But, private mortgage insurance is not a mandatory payment for all homeowners, here is how you can overcome the mortgage insurance payment:
- If you have a down payment more of 20% on a conventional loan you are able to surpass monthly mortgage insurance
- Mortgage insurance is not required with a FHA loan
- Mortgage insurance is not required with a VA loan
Overall, private mortgage insurance is just another payment that most lenders make you pay with a conventional loan, that in reality, you can save yourself from paying.