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Mortgage Insurance coverage – jj
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Mortgage Insurance coverage

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If you’re looking for a home, you’ve probably heard the term “Private Mortgage Insurance,” or PMI.  This the insurance you pay on a loan when you have a low down payment, and it’s to protect lenders and investors from defaults on a mortgage loan.

When you have to have PMI:

You typically are required to have mortgage insurance if you put down less than 20% of your home’s purchase price.  That’s why you need to weigh the benefits before you take the low-down payment loan you qualified for – once you take mortgage insurance into account, you may realize it’s more expensive over the long run.  You can spend over a thousand a year on PMI alone, and frankly that’s not an uncommon figure.

How it Works: the Pros and Cons…

The most straightforward way to get rid of PMI is to either pay the 20% down payment up front, or work to pay your mortgage down to below the original 80% of your home’s value.  You can then request to have your PMI removed, so long as you maintain a good payment history.  Details of requirements from the Consumer Financial Protection Bureau can be found here.

The nice thing is, PMI can allow you to purchase a house if the perfect one comes up, even if you can’t put 20% down right away.  So there are benefits as well!  We just recommend you focus on saving and paying down your mortgage until you can get rid of it – if you’d like a few tips to help you save money, check out a blog here for some help!

As always, give us a call if you’re looking for a lender!  We’re faith and family based, and we’d love to help you find the perfect home for you and your family.

 

Best,

Audrey

The Christian Mortgage Mom

Audrey

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