Private Mortgage Insurance - PMI - In the event that you do not have a 20 percent down payment for your newly purchased home, lenders will allow a smaller down payment, as low as 5 percent in some cases. With the smaller down payment loans, however, borrowers are usually required to carry private mortgage insurance. PMI will usually require an initial premium payment and may require an additional monthly fee depending on you loan's structure.
Private Mortgage Insurance - PMI New Requirements
A new federal law, The Homeowner's Protection Act (HPA) of 1998, requires lenders or servicers to provide certain disclosures concerning PMI for loans secured by the consumer's primary residence obtained on or after July 29, 1999. The HPA also contains disclosure provisions for mortgage loans that closed before July 29, 1999. In addition, the HPA includes provisions for borrower-requested cancellation and automatic termination of PMI.