No PMI Mortgage Options
What is PMI?
PMI (Private Monthly Insurance) is often required by lenders as part of a conventional mortgage to protect them in case you end up in foreclosure. PMI is protection for a lender but an added expense for a borrower. FHA (Federal Housing Administration) and VA (Veterans Affairs) loans are backed by the government. If you default on your loan, the government protects you. For a conventional mortgage, private mortgage insurance is a protector – for lenders, not borrowers. If a borrower defaults on their loan, PMI makes sure lenders get their money.
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: Borrower’s 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 the life of the loan on PMI payments
Please contact me today if you have any questions about doing a NO PMI Mortgage. I will be happy to work with you every step of the way!
Kristina L. Refsbeck