VARA Realty

Real Estate Services

  • About
  • Contact Us

An Overview Of Private Mortgage Insurance

February 26, 2021 by VARA Realty

An Overview Of Private Mortgage InsuranceWhen you are going through the process of looking for a new home, you are probably focused on the sticker price of that home. Even though it is important to think about your down payment, your monthly mortgage payment, and the total amount of the loan, there are other expenses that you might need to cover as well. If you do not put down enough money, there is a chance that the lender could ask you to pay for something called private mortgage insurance. What is private mortgage insurance and how much do you have to pay? There are several important points that you should keep in mind.

Why You Might Purchase PMI

Private mortgage insurance is something that the lender may ask you to purchase as a way to reduce their risk. If you do not make a sizable down payment, then the lender is responsible for funding most of the cost of your home. If you end up defaulting on the cost of that loan, the lender will lose a major amount of money. With PMI, the lender will be able to get his or her money back in the event that you default. Even though the exact cost of PMI will vary, you should expect to pay somewhere between 0.5 percent and 2 percent of the loan. You might be able to ask the lender to check with multiple options to find the least expensive policy possible for you. Once the PMI policy is instituted, this is something that you will have to pay on top of your monthly mortgage payment.

Avoiding PMI Payments

Importantly, there are ways that you can avoid PMI. You might be able to avoid this insurance policy altogether if you are able to increase the size of your down payment. If you cannot do that, the PMI policy will usually be canceled when you reach a certain threshold in equity. This is something that you should negotiate with the lender before you sign on the dotted line. In some cases, the PMI policy as waved when you reach 10 percent of the loan amount paid back. Even though you should check with a professional accountant, PMI is likely tax-deductible, similar to mortgage insurance.

 

Filed Under: Real Estate Tips Tagged With: insurance, Mortgage Payments, Real Estate Tips

VARA Realty
CALL (888) 573-8272
LIC #02049895
  Find a Home
  Sell My Home
  Find Your Home's Value

Connect with Us

Get in Touch!

Recent Articles

  • What’s Ahead For Mortgage Rates This Week – May 16, 2022
  • Getting to Know the Neighbors: 3 Tips for Building Good Relationships
  • Manufactured, Mobile, And Modular Homes: What Are The Differences
  • Offering Asking Price: Is This Offer Competitive In The Current Market?

Looking For Something?

Categories

Quick Links

  • Home
  • Accessibility Statement
  • About
  • Contact Us

Copyright © 2022 · Powered by MySMARTblog