Private mortgage insurance

If you don't have 20% to put down on the purchase price most of the time you have to pay PMI. Really it is more so to protect the lender against loss in case the buyer defaults. On the other hand, it gives a buyer a chance to buy something with maybe only 3-5% down rather than the 20%. This way some buyers have the opportunity to buy something sooner than later because obviously it would take a lot longer to save 20%! Especially in this economy. The good news is you can eventually have this taken off. If you get your loan balance paid down to 80% of the original purchase price or appraised value of your home at the time the loan was obtained, whichever is less you can request cancellation of it. I used to be a Realtor and worked with a lot of first time buyers that had to pay PMI. It will raise your monthly payment some but on the bright side at least it gives you the option to go ahead and buy