What is Private Mortgage Insurance?

Family in front of houseWhat is Private Mortgage Insurance?
Private Mortgage Insurance, or PMI, is usually required on your home if you purchase a home with less than a 20% down payment. PMI helps protect the lender if you end up in foreclosure.

How does it work?
When you purchase a home and you put less than 20% down as a down payment, you will need to purchase PMI and make monthly payments. This can add money to your monthly payment cost.

Can I remove PMI from my loan?
In some cases, you can contact your mortgage lender when your loan to value ratio reaches 80% and the PMI can be dropped. However, there are many types of loans, especially FHA loans that require PMI for the life of the loan. To remove PMI in those cases, you would need to entirely refinance your loan, which can be time consuming and costly. It's best to know up front what type of loan is best for you and if you can manage the payments long term.

How can I avoid PMI?
The best way to avoid PMI is to save 20% cash towards the down payment on your home. However, saving this amount of money may seem very difficult and time-consuming, especially considering you will need to allow for closing costs as well. Christian Financial's mortgage partner, Mortgage Center, offers a PMI Saver mortgage that allows members to avoid PMI payments while only putting 10% cash down. 

For more information, or to speak with a representative about your PMI options, call 1.800.353.4449 or visit Mortgage Center online.

 
Posted: 8/11/2017 4:27:39 PM by Rebekah Monroe | with 0 comments