When you are buying a home, you may run into a number of hurdles to complete the purchase. One of the items that you may be asked to purchase is called private mortgage insurance, often shortened to PMI. This is a unique insurance policy that your lender, such as the credit union or bank, may ask you to buy in order to protect themselves. In this insurance policy, the bank protects themselves against losing money if you end up defaulting on your loan.
PMI, which is also called private mortgage insurance, is protect that the lender may ask the buyer to purchase. In the event that the buyer defaults on their home loan and the home enters foreclosure, the lender has a way to recoup their losses.
Homeowners insurance and title insurance may not be the only kinds of insurance you need when you buy a home.
Every insurance policy is different and can provide certain levels of protection tailored towards the needs of the policy holder. However, there are some standard types of coverage that are included in most basic home insurance policies.
Homeowner’s insurance is an incredibly valuable and beneficial policy for homeowners to have, but it is necessary to understand what traditional policies do and do not cover.