What is PMI?

Many New Hampshire home buyers make down payments of less than 20 percent and have to pay private mortgage insurance (PMI). PMI is a type of insurance policy that reimburses your lender if you default on your mortgage.

Private mortgage insurance charges vary depending on the size of the down payment and the type of loan. Example: A borrower buying a house with no down payment will pay a higher PMI than a borrower putting down 10%. PMI adds thousands of dollars to the cost of your home over time.

PMI isn’t necessarily a bad thing because it enables home buyers with less than a 20% down payment to get an interest rate that is just as low as if they did have the 20% down.

Tomorrow, I'll tell you how to get rid of PMI.