All lenders require borrowers to pay a premium for private mortgage insurance if the borrower’s down payment is less than twenty percent of the purchase price of the property. The purpose of this policy is to ensure the lender that it will not suffer any loss in the event that the borrower defaults on the mortgage loan and the lender is required to foreclose on the property. The closing documentation will usually include forms in which the borrower acknowledges that the lender will maintain the private mortgage insurance on the loan and that the borrower will pay the premium for this insurance on a monthly basis, and that there will be no refund of any unused portion of the premium at the time that the loan is paid off.