![]() ![]() Now we know what private mortgage insurance is, and why it’s needed in some cases. Also, California PMI policies can usually be cancelled once the homeowner pays down the mortgage balance to the point that the LTV reaches 80% or below. The biggest benefit is that it allows you to buy a house sooner, without saving up for a 20% down payment. ![]() ![]() Yes, it brings added costs for some borrowers. Private mortgage insurance isn’t a bad thing. This is often the case when a borrower makes a down payment below 20%. That’s because the insurance is provided by a private-sector company, and not by the government.Ī PMI policy is generally required whenever the loan-to-value (LTV) ratio rises above 80%. When it’s applied to a conventional (non-government) loan, it’s referred to as private mortgage insurance. This type of insurance can be applied to both FHA and conventional home loans. Definition of Private Mortgage InsuranceĬalifornia private mortgage insurance, or PMI, is a specialized type of insurance policy that protects mortgage lenders from financial losses that may result from borrower default or failure to repay. One of the most frequently asked questions is: How can I avoid paying PMI in California? We’ve covered this topic before, and today we will revisit it from a different angle.īut first, let’s take a brief look at what PMI is, and why some borrowers have to pay it. Home buyers and mortgage shoppers in California tend to have a lot of questions when it comes to private mortgage insurance, or PMI. Read on to learn more about this and other strategies for avoiding mortgage insurance in the Golden State! In exchange, the lender will pay your policy for you. Summary: It’s possible to avoid PMI in California by taking on a slightly higher interest rate. ![]()
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