Private Mortgage Insurance (PMI) for Homebuyers
What is Private Mortgage Insurance, aka PMI?
Private mortgage insurance, or PMI, is an insurance policy that protects the lender in case the borrower defaults on their mortgage payments. PMI is usually required when a borrower makes a down payment of less than 20% of the home's purchase price.
How Does PMI Affect Homebuyers?
PMI can be a valuable option for homebuyers who don't have a large down payment saved up but still want to purchase a home. By paying for PMI, borrowers can obtain a mortgage with a lower down payment, which can make homeownership more accessible.
How is PMI Calculated and Paid?
PMI rates are usually calculated as a percentage of the loan amount and can vary depending on factors such as the borrower's credit score and the size of the down payment. PMI is typically added to the monthly mortgage payment, making it easier for borrowers to budget for their housing costs.
How to Get Rid of PMI?
It's important to note that PMI is not permanent. Once the borrower's equity in the home reaches 20%, PMI can be cancelled. Borrowers can also request to have PMI removed once their equity in the home reaches 20%, as long as they have a good payment history and have met other requirements set by the lender.
At Contemporary Mortgage Services, Inc., we understand that every homebuyer's situation is unique, and we can help you navigate the complex world of Private Mortgage Insurance. Our experienced loan professionals can guide you through the process of obtaining a mortgage, including helping you understand the pros and cons of PMI and finding the best mortgage product and options for your needs.
Click the following link to view our recent blog post on private mortgage insurance, which covers the topic in greater detail: What is Private Mortgage Insurance aka PMI
Contact us today to learn more about private mortgage insurance and how it can help you achieve your dream of homeownership.
Contemporary Mortgage Services, Inc.