What is home insurance? What is private mortgage insurance (PMI)?
Just like you have health insurance to cover you when you have medical expenses, lenders will require you to acquire home insurance. This insurance typically covers fire, theft, etc. There are also specialty types of insurance that can cover natural disasters like floods or earthquakes.
Private mortgage insurance, (PMI) is a type of mortgage insurance you might be required to pay for if you have a conventional loan and is usually required if you make a down payment that is less than 20% of a home's price. Like other kinds of mortgage insurance, PMI protects the lender—not you—if you stop making payments on your loan. You may be able to remove your PMI requirement by making a 20% down payment, or once you have additional equity in the home.