New home buyer, what is PMI and why are you required to have it?

If you're looking to buy your first home and you've come across the term PMI, you might be wondering what it is and why it's important. Today, I'm here to tell you all about it.

Imagine you're ready to buy your dream home. You've found the perfect place, but you don't have a 20% down payment. This is where PMI comes in. PMI stands for Private Mortgage Insurance, and it's a type of insurance that protects the lender if you, the borrower, default on your mortgage.

Now, you might be thinking, "Why do I need to pay for insurance that protects the lender?" Great question. PMI allows you to buy a home without having to save up for a full 20% down payment. This can make homeownership more accessible, especially for first-time buyers. Essentially, PMI is your ticket to getting into a home sooner rather than later.