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Private Mortgage Insurance, also called PMI, is an insurance policy explicitly for the benefit of the lender to insure against the borrowers’ eventual default on the mortgage. If you are putting less than twenty (20%) percent down on the purchase of your new home, you will likely see “PMI” on the breakdown of your monthly escrow payments. Depending on total loan amount, PMI typically costs around one hundred dollars a month, an expense borne by the borrower and for the sole benefit of the lender/servicer. The insurance policy protects the lender, in the event that have to sue for foreclosure, against any loss in the value of the property, which was very common in the real estate crash of 2008. In theory, the requirement of the borrower paying for PMI should be removed once the total outstanding balance of the loan is less than eighty (80%) percent of the fair market value (“FMV”) of the property. Often the removal of PMI will require affirmative steps being taken by the borrower to a) inform the lender of the increased FMV of the property and/or b) provide evidence of new FMV, by virtue of an appraisal report by a certified appraiser. If you are believe you have in excess of twenty (20%) percent equity in your property but are still required to pay PMI as part of your escrow payments each month, you should request information from your loan servicer on their removal process and then determine it is financially feasible to incur said expenses. For more information about Private Mortgage Insurance, please check the Consumer Financial Protection Bureau’s website.