There are many costs associated with buying a new one. Obviously, you will need to pay for the home with either cash or a mortgage. There are other costs associated with purchasing a home too. One of the costs that some people may not expect is private mortgage insurance or PMI.
PMI is a specific kind of insurance that is required when your down payment is less than 20 percent of the total value of your home. If you default on your loan, PMI will pay off the outstanding balance of your mortgage, thus protecting your lender.
How much can you expect to pay for PMI each month? The actual amount usually varies based on the amount of your down payment as well as the amount of coverage required by your lender. Typically, PMI equates to half of one
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