What Is Private Mortgage Insurance (PMI)? Ventura County Mortgage

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Real Estate Agent with Allison James Elite CA. BRE 01501699

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Your home is probably the biggest asset you own. This is why you should hire a professional to guide you through all your real estate transactions. My goal is to help 24 to 28 families each year either buy or sell a home. I am NOT interested in Selling 100 or 200 homes a year because I would not be able to give each family the time, attention and energy they deserve....

What Is Private Mortgage Insurance (PMI)? | MyKCM

When it comes to buying a home, whether it is your first time or your fifth, it is always important to know all the facts. With the large number of mortgage programs available that allow buyers to purchase homes with down payments below 20%, you can never have too much information about Private Mortgage Insurance (PMI).

What is PMI?

Freddie Mac defines PMI as:

“An insurance policy that protects the lender if you are unable to pay your mortgage. It’s a monthly fee, rolled into your mortgage payment, that is required for all conforming, conventional loans that have down payments less than 20%.

Once you’ve built equity of 20% in your home, you can cancel your PMI and remove that expense from your mortgage payment.”

As the borrower, you pay the monthly premiums for the insurance policy, and the lender is the beneficiary. Freddie Mac goes on to explain that:

“The cost of PMI varies based on your loan-to-value ratio – the amount you owe on your mortgage compared to its value – and credit score, but you can expect to pay between $30 and $70 per month for every $100,000 borrowed.” 

According to the National Association of Realtors, the average down paymentfor all buyers last year was 10%. For first-time buyers, that number dropped to 5%, while repeat buyers put down 14% (no doubt aided by the sale of their homes). This just goes to show that for a large number of buyers last year, PMI did not stop them from buying their dream homes.

Here’s an example of the cost of a mortgage on a $200,000 home with a 5% down payment & PMI, compared to a 20% down payment without PMI:

What Is Private Mortgage Insurance (PMI)? | MyKCM

The larger the down payment you can make, the lower your monthly housing cost will be, but Freddie Mac urges you to remember:

“It’s no doubt an added cost, but it’s enabling you to buy now and begin building equity versus waiting 5 to 10 years to build enough savings for a 20% down payment.”

Bottom Line

If you have questions about whether you should buy now or wait until you’ve saved a larger down payment, let’s get together to discuss our market’s conditions and help you make the best decision for you and your family.

 

 

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Chris B. Johnson is a REALTOR® who Specializes in Short Sale and REO Transactions. Chris has been Certified as a California Association of Realtors HAFA Specialist, a National Association of Realtors Short Sale and Foreclosure Resource, Chris B Johnson Realtor is a Certified Distressed Property Expert, Certified Short Sale Negotiator, Certified Default Advocate and Certified Pre-Foreclosure Specialist. With a full time staff dedicated to short sale negotiations and transactions, we have been successful with (almost) every short sale to date.  LinkedIn Pro    UpNest    What's Your Home Worth?

 
The information contained, and the opinions expressed, in this article are not intended to be construed as investment advice. Keeping Current Matters, Inc. does not guarantee or warrant the accuracy or completeness of the information or opinions contained herein. Nothing herein should be construed as investment advice. You should always conduct your own research and due diligence and obtain professional advice before making any investment decision. Keeping Current Matters, Inc. will not be liable for any loss or damage caused by your reliance on the information or opinions contained herein.
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Rainmaker
508,303
Chris B Johnson REALTOR®
Allison James Elite - Moorpark, CA
5 Star Rated REALTOR® Quality, Not Quantity

2021 E Bard RD, Oxnard, CA 93033 is For Sale, Get all the details here: http://2021bard.ihousenet.com/

Apr 10, 2018 09:43 AM #1
Rainmaker
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Steffy Hristova
HomeSmart Elite Group Tempe AZ Tel: 480-966-9353 - Tempe, AZ
Tempe AZ Realtor - Your Home Close to Your Work!

Chris, what an easy explanation of what PMI is, and within the context of the loan. I think Buyers will enjoy this simple and visual explanation.

Apr 10, 2018 09:47 AM #2
Rainmaker
508,303
Chris B Johnson REALTOR®
Allison James Elite - Moorpark, CA
5 Star Rated REALTOR® Quality, Not Quantity

Thank you Steffy Hristova !!

2021 E Bard RD, Oxnard, CA 93033 is For Sale, Get all the details here: http://2021bard.ihousenet.com/

Apr 10, 2018 10:06 AM #3
Rainmaker
508,303
Chris B Johnson REALTOR®
Allison James Elite - Moorpark, CA
5 Star Rated REALTOR® Quality, Not Quantity

Remodeled, Refreshed and Ready for move in! #TimeToBuy #ChrisBJohnsonRealtor https://www.flexmls.com/share/1OIHk/2021EBardRDOxnardCA93033 2021 E Bard RD, Oxnard, CA 93033

Apr 11, 2018 09:45 AM #4
Rainmaker
508,303
Chris B Johnson REALTOR®
Allison James Elite - Moorpark, CA
5 Star Rated REALTOR® Quality, Not Quantity

2021 E Bard RD, Oxnard, CA 93033 IS Remodeled, Refreshed and Ready for move in! http://2021bard.ihousenet.com/ #TimeToBuy #ChrisBJohnsonRealtor

Apr 13, 2018 10:00 AM #5
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Rainmaker
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Is it Too Late to Short Sell My Home??
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