No PMI Mortgage Options in Connecticut

Posted on February 16, 2015 · Posted in Connecticut Home Purchase Mortgage, Connecticut Mortgage Refinance

No PMI Loan Options

Conforming loans are loans that are backed and purchased by Fannie Mae or Freddie Mac. To offset the risk of default loans over 80% LTV (loan to value) are required to have Private Mortgage Insurance. The cost of this is applied as a separate monthly charge paid by the borrower.

An example of this (Hypothetical) is a person taking out a $200k mortgage and having a LTV of 95% would pay about $90/month in PMI a month. Over the course of 5 years that comes to almost $6000.

 

  • A few options to avoid PMI insurance are to try and put more money down. This would save a borrower thousands by not having to pay the monthly PMI but the overall mortgage payment would be lower as well.
  • Finance the cost of the PMI into the loan. This would result in a higher interest rate (not by much) but could make sense if you intend to stay in the house for a long period of time.
  • Pay the cost of the PMI up front. This option would allow you to include the cost of the PMI in the financing of the loan.
  • Take out two mortgages. In this scenario you would have the first loan under the ltv of 80% and the second mortgage would be the 15%. Overall the payments should be lower than a single loan with PMI.

 

 

If you have any questions do not hesitate to reach out to me to discuss your options.

 

craig picCraig Thibeau
Senior Loan Officer
North East Financial Middletown, CT
Ph 860-334-1354
NMLS  398576 Company NMLS 117273
craig@northeast-mortgage.com
www.northeast-mortgage.com