In real estate finance, P.M.I. refers to private mortgage insurance, which is insurance provided by a private company to protect a lender against loss in the event of borrower default. It is commonly required when a borrower makes a smaller down payment and the loan to value ratio exceeds a lender’s standard threshold.
Private mortgage insurance enables lenders to offer loans with higher loan to value ratios by reducing their risk exposure. The cost of P.M.I. is typically paid by the borrower, either as part of the monthly mortgage payment or as an upfront premium.
