Private Mortgage Insurance
Private mortgage insurance (PMI) is insurance coverage that homeowners are required to have if they’re putting down less than 20% of the home’s cost. PMI protects the lender if the house falls into foreclosure. Once your equity rises above 20 percent, either through paying down your mortgage or through appreciation, you might be eligible to stop paying PMI. The first step is to call your lender and ask how you can cancel your private mortgage insurance.
What is an Appraisal?
A home appraisal is an unbiased estimate of the true (or fair market) value of what a home is worth. Your lender will order a professional appraisal of the property and review recently sold properties in the area to make sure the sale price is reasonably close to it's true value to serve as collateral on your loan.
A Conventional loan is a mortgage that allows you to have a loan-to-value (LTV) ratio of as high as 97%. This means that if you’re purchasing a home with a $100,000 asking price, you can borrow up to $97,000 and will have just $3,000 (3%) to put down as your down payment.