Private Mortgage Insurance (PMI)
How does PMI work?
PMI companies write insurance protecting approximately the top 20% of the mortgage against default, depending on the lender's and investor's requirements, the loan-to-value ratio, and the particular loan program involved. Should a default occur, the lender sells the property to liquidate the debt, and is reimbursed by the PMI company for any remaining amount up to the policy value.
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