PMI, or private mortgage insurance, provides protection in case you default on your loan. If you are able to make a 20% down payment, it is not required that you have private mortgage insurance. If you are unable to make a 20% down payment, then you may be required to pay a monthly premium for PMI.
PMI covers your loan officer in case you miss payments on your house. These fees vary based off of differing factors such as: credit score, the type of home you purchase and the size of your loan. Private mortgage insurance can help you build wealth when used properly. If your credit meets a certain score, you can avoid allocating money for a costly down payment to free cash up for other costs or investments.
In addition, private mortgage insurance will typically fall off the loan once you have reached 20% equity in your home. If you have questions about a current loan with PMI, contact your loan officer today.
Private mortgage insurance is a great tool as it allows you to qualify for a loan which, originally, you may not be approved for. This product is not for everyone, so get in contact with us today for more information!