I'm buying a house. What exactly is PMI and what's the best way to pay it?
3/7/2013 4:45:31 PM
PMI stands for private mortgage insurance and is there to help protect lenders who own the mortgage when homeowners don’t have enough equity in the property when refinancing or don't have a large enough down-payment when purchasing a home. PMI is there to protect the lender should the borrower default.
While some people choose to pay PMI upfront, another option some borrowers consider to avoid paying a monthly PMI premium in their mortgage payment is to apply for a second mortgage to make up the difference. The potential downsides are that the interest rate is usually higher on the second loan than on the first (so you should consider paying it off quickly), and you’ll have two mortgage payments to make.
Every borrower’s situation is different and many variables, such as the amount of the PMI and the amount of financing you can afford among other things can affect how you choose to pay the PMI. You’ll need to carefully consider these things plus any others specific to your situation before making a decision. And of course, if you can't figure out what's best, Delta Community has home loan experts ready and willing to walk you through what can be a complicated process. So give us a call!
Posted: 3/7/2013 4:45:31 PM
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