Primary Mortgage Insurance (PMI)

More and more people are increasingly turning to lower down payments when purchasing a home. Payments of 10, 5, or even 0 percent have become more common to allow first time buyers an opportunity to own a home with little cash up front.

Lower down payments often require Private Mortgage Insurance (PMI) to secure the loan. The PMI helps to protect the lender in case the borrower defaults on the loan. Homeowners who pay the 20% downpayment typically can forego PMI.

Once a property owner has paid off 20% of the home's capital or built up 20% equity in the home (loan to value ratio), they can apply to have the PMI removed from their mortgage loan. For some homeowners, PMI can account for up to $100 or more added onto the mortgage payment. Additionally, PMI is not Tax Deductible. Removing PMI is highly advised for many homeowners who have 20% or more equity in their home.