I don’t understand how making me pay an extra 500$ a month makes me MORE likely to not default on my loan. I live in Southern California and to put 10% down on a house it costs like 170k at least. Anyways I’d love to know why it’s mandatory I pay PMI.
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PMI is an insurance policy against a borrower ‘s default resulting in a loss to the bank.
If your down payment is small enough and you default early, even after foreclosure the bank may not recover the entire balance owed. That’s where PMI pays.
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