What does PMI stand for?

PMI stands for Private Mortgage Insurance. This type of insurance is typically required by lenders when a borrower is unable to make a substantial down payment on a home, usually less than 20% of the purchase price. The purpose of PMI is to protect the lender in case the borrower defaults on the mortgage. It allows buyers to purchase homes with lower down payments, thus making homeownership more accessible.

When PMI is in place, the insurance premium is often added to the monthly mortgage payment or can sometimes be paid upfront. Understanding PMI is critical for both real estate professionals and borrowers, as it affects the total cost of purchasing a home and the monthly payment obligations and can also impact the decisions surrounding the timing of home purchases.

Other options listed, such as Primary Mortgage Interest, Property Management Insurance, and Premium Mortgage Investment, do not accurately describe PMI and relate to different aspects of real estate and finance. They are either not standard terms used in the mortgage industry or pertain to different concepts entirely.