Understanding PMI (Private Mortgage Insurance)

When you decide to buy  Vancouver real estate ,you will make a down payment and get a mortgage loan on the balance.  If that amount falls short of 20% of the homes value, and you are going to get a conventional loan (one not backed by the federal government) then you should be aware that you will most likely have to pay for private mortgage insurance. (Some cash-out refinance loan transactions will require PMI, but at 75% loan to value).

Private mortgage insurance (PMI) is a policy that protects the lender against financial loss if you should default on your loan.  Experience tells lenders that the more money you put into a home, the lower the risk.  You are far less likely to walk away from your loan when you have a substantial amount of cash to lose, in addition to your home.  On the other hand, the less invested you are financially, the higher the risk.

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