- January 22, 2019
- Posted by: Drew Raney
- Category: Connecticut
No PMI Loan Program
Obtaining a No PMI Loan is not as difficult as many may think. At Northeast Financial we have multiple options to help borrowers get a mortgage without PMI. Most noteworthy about these options is that they can be used for either a refinance or a home purchase loan
What is PMI?
PMI (Private Monthly Insurance) is often required by lenders as part of a mortgage to protect them in case you end up in foreclosure. PMI is protection for a lender but an added expense for a borrower. With conventional mortgages, borrowers will have PMI if they are putting down less than 20%. FHA loans have PMI for the life of the loan no matter how much a borrower put down. In contrast, Veteran Mortgages do not have monthly PMI but instead have an upfront fee to protect the program in case of foreclosure.
How to Avoid Paying PMI:
USDA Loans : First of all, USDA loans offer 100% financing for qualified borrowers in ‘rural’ areas. This program requires a ‘guarantee fee’ that is paid upfront and monthly. It is less than conventional PMI and decreases annually. As a result, this loan type is a better alternative than paying traditional PMI. Even more, many borrowers refinance these types of loans when they are at 80% LTV in order to get rid of PMI.
20% Down Payment: Borrowers can avoid PMI insurance by putting down 20% for their down payment. Taking the time to save up for a down payment of 20%, may be worth the money spent over making monthly PMI payments
Lender Paid PMI: A popular new home loan product is lender paid PMI. Lenders pay the mortgage insurance for the borrower in turn for a slightly higher interest rate. Whereas this is not a traditional No PMI Loan program, it is a good alternative to avoid monthly PMI.
Please contact me today if you have any questions about doing a No PMI Loan. We will work with you every step of the way. Our Pre-approval process is easy, and we are more than happy to come out and meet you in person.
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