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If you type PMI into Google, the first result that pops up will likely be for a non-profit organization. But if you scroll down a few results, you’ll see the meaning that makes a lot more sense within the context of buying a house: Private Mortgage Insurance. Or in some cases, Private Mortgage Insurer.

In either case, these are privately-owned companies that provide mortgage insurance. They offer both standard and special affordable programs for borrowers. These companies provide guidelines to lenders that detail the types of loans they will insure, and Lenders use these guidelines to determine borrower eligibility.

Most mortgage lenders will require that you have mortgage insurance in order to obtain a loan. PMI’s usually have stricter qualifying ratios—like having a good credit score—and larger down payment requirements than the Federal Housing Administration (FHA), which is another option for mortgage insurance. But PMI premiums are often lower and they insure loans that exceed the FHA limit. In other words, PMI’s give you more options if you qualify.

At Title Junction we care about helping you stay informed throughout your real estate transaction. Have questions? Give us a call at 239.415.6574.

In case you missed it, check out our last Title Junction post: Beginners Mini-Guide to Real Estate Investments

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