As a home buyer, understanding mortgage insurance options is just as important as obtaining the right home loan and interest rate.
In instances when the home buyer needs to make a down payment that is less than 20% of the purchase price of the home, private mortgage insurance (PMI) can qualify them for a loan they may not otherwise be able to get.
Many years ago, the down payment requirement was much higher and people had to save for years to be able to afford the down payment on a home. This would require them to pay rent for many years while they tried to save money. Many borrowers were limited in their loan options because they were not in a position to put 20% down.
PMI is a way for borrowers to have more options for loans that are a better opportunity for them while also offering less risk to the lender.
Some good news recently for PMI is that premiums are lower than they have been in the past. Many PMI companies have lowered their rates due to the corporate tax cuts instituted by the Trump administration. There are a variety of PMI options that will reduce the monthly payment for many borrowers.
Our mortgage lenders are happy to answer your questions. You can talk to us more about PMI or any part of the home buying process.