Here’s what homebuyers need to know about private mortgage insurance.
Have you ever heard of private mortgage insurance (PMI)? What is it and why is it required depending on the loan product you choose?
PMI is an offset for the lender’s risk, and it is legally required if you put less than 20% down on your home. Also, FHA loans require mortgage insurance premiums. This is because it’s government-backed, and if you default, they can recoup their money through the premiums.
You need to consider different loan products when buying a house. PMI can fall off over time depending on the increase in the home’s value. It is essential to be aware of the additional fees, taxes, PMI, and other costs when buying a home, or it could cost you in the long run.
I recommend you speak with a few lenders and ask your agent about PMI as well as other loan programs. Different programs have various benefits and drawbacks, so it’s crucial to find the right program for your specific needs.
Please feel free to call or email me with any questions about PMI and buying a home. Make it a great day!