Private Mortgage Insurance Is Not Always Required
Private Mortgage Insurance
Did you know that you may be paying for private mortgage insurance even though you don’t have to? Having pmi is something that lenders will charge you for as long as your mortgage is higher than 80% of your home’s value. But, once you get below this level, then you no longer have to pay for this coverage. private mortgage insurance is a protection that lenders have that ensures they will recover their money if a new borrower defaults or causes the home to go into foreclosure. Pmi is designed to protect lenders until the borrower demonstrates a commitment to pay on time as well as generate equity into the home.
But, you don’t need private mortgage insurance if you can reduce your loan below that eighty percent mark. In fact, one of the most popular and easiest ways to avoid pmi is to take out a second loan to cover your down payment. Not only will you get a double tax-deduction, but you will be putting all of your money towards your home instead of wasting it on fees that lenders will try to charge you through pmi for as long as they can get away with it.
Private mortgage insurance is a good idea, and it is most commonly wrapped up into the overall monthly payment, however once you get below that magic mark, then your pmi will decrease. This means you can put more money towards the principal of your loan and direct more of your money toward increasing the equity you have in your home. Pmi is also negotiable, and you can either try and get a better rate from the company you have now, or you can take advantage of this, and take time to find a lender who will give you better terms, and who knows, maybe a better rate on private mortgage insurance as well.
If you want to see how much you can save from avoiding having to make private mortgage insurance, go to one of the many online calculators that are out there, and plug in your information and see the results. If you can make some minor adjustments, then you can save a ton of money that you could be using for better things. Pmi is a good thing, but not everyone needs to pay for it after a certain period of time and then that’s all.