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For PITI's sake: Mortgage acronyms defined

Mortgage » For PITI's sake: Mortgage acronyms defined

PMI and MIP
PMI and MIP © iStock

PMI and MIP

Private mortgage insurance, or PMI, is paid by the borrower to protect the lender's investment when the borrower makes a down payment of less than 20% on a home purchase, or when the borrower has less than 20% equity in a refinance.

But don't let the name fool you. The borrower pays the premium and the lender gets the benefit in the event of default. On a loan insured by the Federal Housing Administration, the borrower pays a mortgage insurance premium, or MIP.

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