What is Private Mortgage Insurance (PMI)
and Why Do I Have to Pay It?

 

ARTICLE OVERVIEW:

 

Private mortgage insurance insures the lender against default and can be costly for you.

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Even if you have as little as five percent down, you can still get a mortgage without having to pay PMI.

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Private Mortgage Insurance (also referred to as mortgage protection insurance on the West Coast) is a costly insurance premium that the borrower pays to protect the lender in case he defaults on the loan. As part of the loan qualifications set out by Fannie Mae and most secondary market investors, a borrower is required to pay private mortgage insurance (PMI) when they don't put down at least 20 percent of the home's purchase price as a down payment. But with the right loan, it doesn't have to be an obstacle. In fact, you could avoid it entirely.

Just How Costly Is Private Mortgage Insurance?

 

Mortgage protection insurance increases your monthly payment and may be tax-deductible (please check with your tax advisor). The cost of private mortgage insurance varies, but generally it calculates to about one-half percent of the total loan amount. Let's say you buy a home for $200,000 and put five percent down or $10,000. The annual cost of PMI on your $190,000 mortgage might run $950 a year, adding an extra $80 to your mortgage payment each month. However, this doesn't necessarily mean your payment will be $80 cheaper if you can avoid PMI.

How Can I Avoid Private Mortgage Insurance?

 

At Family First Mortgage, you can avoid having to pay insurance for mortgage protection with our PMI Buster Loan. With as little as five percent down, the PMI Buster is a simple route to avoiding PMI. It can help you to buy the home you want and keep your payments low. Basically what you do is you pay a slightly higher rate in exchange for having the lender pay your private mortgage insurance for you.

If you're a first-time home buyer or just someone who doesn't have a whole lot to put down on a home, the PMI Buster loan can be a great way to go.

*Please consult your tax advisor.

Learn More About How You Can Avoid PMI

 

If you're buying a home with less than a 20 percent down payment, call 732-734-4500 to talk to a mortgage banker

Interested in buying a home with no down payment? Find out WWW.YOURFAMILYHOMELOANS.COM  

Can you purchase your home without paying PMI?
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