In mortgage transactions, what does PMI stand for?

PMI stands for Private Mortgage Insurance, which is a critical component in many mortgage transactions, particularly for borrowers who are unable to make a substantial down payment, typically less than 20% of the home's purchase price. PMI protects the lender in the event that the borrower defaults on the loan. This insurance allows lenders to offer financing to buyers who may be viewed as higher risk due to smaller down payments. If the borrower defaults, PMI provides the lender with an additional layer of security, thereby enabling more individuals to qualify for mortgages.

The other options do not accurately reflect the context of mortgage transactions: Property Management Insurance is not a standard term associated with mortgages; Primary Mortgage Income is not a recognized acronym within the industry; and Personal Mortgage Interest could confuse borrowers regarding tax implications, but it does not relate specifically to insurance in mortgage transactions.