What is PMI (Private Mortgage
Insurance) ?
PMI is essentially
"foreclosure insurance" and only benefits the Lender. In the event you default
on your loan, the insurance company will pay the Lender. PMI is usually required on loans
with less than 20% down payment. |
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How
much does PMI cost ?
Typically PMI ranges from .23% to .92%
of the loan amount and is usually paid monthly along with other items such as your taxes
and homeowners insurance. On a $100,000 loan, PMI would range from $20 to $77per month.
The cost of PMI is determined by the type of loan (adjustable vs. fixed) , the term of the
loan (30 year vs. 15 year) and the amount of down payment (0%. 3%, 5%, 10% or 15%).
The more down payment you have the lower the monthly PMI.How can I
avoid PMI ?
ONE WORD OF CAUTION. Most lenders who advertise a no PMI loan are actually
"self-insuring" or providing their own PMI . This is accomplished by raising the
rate on your loan by as much as 1.00%. We do not consider this a no PMI loan.
There are truly only two ways to
avoid PMI altogether. One is to make a down payment of at least 20%. If you do not have
20% to put down, you may be able to utilize our "piggy back" loan program. We
refer to this as our 80/10/10 program and our 80/15/5 program . The first mortgage is made
at 80% of the purchase price and a second mortgage is simultaneously made for the
remaining 10% to 15%. This type of financing is available for as little as 5% down
payment.
Please contact our office today
for details on our TRUE NO PMI LOAN.
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