Q: I’m considering private mortgage insurance (PMI) on the new home I want to buy. Is this is a good idea, and do I really need PMI? 

A: PMI is an extra fee that you pay every month with your mortgage. It is designed to keep the lender safe if you default on the home loan. You can save potentially hundreds of dollars a month if you can avoid having to add PMI to your mortgage loan. 

1. How to avoid private mortgage insurance. You can avoid PMI by having 20% or more for your down payment. Lenders see borrowers who can’t put down 20% or more as risky, so they add the insurance. ✓ You may also be able to find government or other agencies that can help with your down payment so PMI won’t be required. Research federal, state, and local programs. Some programs are designed for those in specific industries, too, such as farmers, veterans, firemen, and police officers, so check into agencies that benefit your industry as well.
2. Understand the lack of benefits. It’s important to remember that having PMI doesn’t help you in any way. It’s created to guard the lender and not you. ✓ This insurance doesn’t keep you safe, and it doesn’t reduce the balance of your loan. ✓ Private mortgage insurance is simply an extra fee you have to pay that doesn’t benefit you or your family. ✓ It’s also not tax deductible.
3. Understand the removal process. Once you get PMI, it’s not easy to get rid of it. ✓ Lenders may still view you as risky and make the PMI removal process a nightmare. ✓ Some lenders don’t even provide the option of eliminating the private mortgage insurance, so you may be stuck with it for the duration of the mortgage loan. 

You can avoid private mortgage insurance and save money on your mortgage payment every month. Take the time necessary to save 20% before shopping for a mortgage or find an agency that helps with your down payment without adding PMI. Avoiding PMI takes effort, but it’s well worth your time.

When you are looking to protect your loved ones and make sure that your mortgage is paid off so your family doesn't ever have to be kicked out of their home if tragedy ever struck, what you need is Mortgage Protection Insurance. Unlike P.M.I., Mortgage Protection Insurance is actually for the benefit of you and your family.