Marino & Marino, P.C.


Serving Greater Boston

Understanding the Vocabulary

As certain terms and phrases are taken for granted in our industry and not obvious to first-time homebuyers or to anyone who has not been involved in a real estate transaction for a while, we at  Marino & Marino want to share definitions, descriptions, and real-life examples to help clarify and simplify the process.  Each week we will discuss a topic based on questions we are frequently asked at the closing table and throughout transactions.  To begin:

Private Mortgage Insurance (PMI) — Insurance against a loss by a lender in the event of default by a borrower (mortgagor). The insurance is similar to insurance by a governmental agency such as FHA, except that a private insurance company issues it. The premium is paid by the borrower and is included in the mortgage payment. (

PMI is typically required for loans where the borrowers cannot make a full 20% down payment.  The cost of the premium varies dependent on a few factors and is generally paid in installments as part of the monthly mortgage payment.

The benefit of loan products that offer less than 20% down payment (but include PMI payment) is that they allow buyers to purchase a home with sometimes a significantly smaller down payment giving them more home options and flexibility.  As the equity grows in their home, buyers are given the opportunity to remove the PMI payment.

Once the principal balance of the loan reaches 80% or less of the value of the property, the borrowers can initiate the processes of removing the PMI portion of payment from their monthly mortgage payment.

If you are currently paying PMI, contact us today to review your options.

Check back next week for more real estate terms and examples!