PMI is one of those things in life that is both a curse and a blessing. Without it, cash-poor homebuyers can’t get a loan. With it, your payments are higher, it takes a long time to get rid of (with some loans it never goes away) and it only protects the lender.
PMI is short for “private mortgage insurance.” If you have an FHA-backed loan it’s called MIP for “mortgage insurance premium.” If you put down less than 20 percent when you take out a conventional loan, you will be required to pay a monthly mortgage insurance premium to cover the lender in the event you mess up and default on the loan. FHA loans have different requirements.
Mortgage Insurance and the FHA Loan
Borrowers who were granted an FHA-backed loan prior to June 3, 2013 can get rid…