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Mortgage insurance is also known as PMI or private mortgage insurance. If you are trying to take out a new home loan for more than 80% of the value of the property you are buying, you will need mortgage insurance. Usually, if you cannot pay for your home loan, the lender has the right to take over the home and sell it in order to get back the money that you owe them. In cases where more than 80% of the value property is insured under one loan, the lender cannot be sure to get all their money back even if they have to sell your property. Mortgage insurance corrects this problem. Mortgage insurance need is dependent on appraisals. Appraisals will tell the lender how much the property is worth, and from this information they can figure whether you're asking for more than 80% of the value property. If you will have less than 20% equity in the home, you may be charged mortgage insurance. This may cause serious financial problems, since you will be required to pay mortgage insurance premiums on top of your new home loan. To avoid this common problem, many home buyers go to great lengths to make sure that they do not have to pay mortgage insurance. Luckily, this is fairly easily to do. Mortgage refinancing is one way to ensure that you do not have one loan that is worth 80% of your home value. Many home buyers also take out a second mortgage home loan, or even more than one extra home loan, in order to split up total amount they need to borrow. For example, some homebuyers will take out a new home loan for 80% of the value of the property, will get a 10% home equity loan, and will make a 10% down payment. This will cover 100% of the home's value, but will save them the money they would be required to pay for mortgage insurance. Other buyers will take out an 80% new home loan, and a 10% or 20% second mortgage home loan. Again, this will cover the cost of the property without requiring extra mortgage insurance costs. Not all homebuyers are able to avoid mortgage insurance, but there are lots of lenders were willing to work with you in order to help you avoid this common cost.