Page 46 - The Latest Homebuying Guide
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company. Each year when the premium is due, the lender will
pay the insurance from the escrow account.
If you do not maintain your insurance coverage the lender has the
right to use forced-placed insurance to protect their interest.
Private Mortgage Insurance
PMI is provided by private insurance companies to protect a
lender’s interest in case you default on your loan. If you get a loan
that covers more than 80% of the purchase price, you are obligated
to get PMI. Coverage normally goes away when your equity in the
property reaches 20 percent.
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