Today I want to talk to you about private mortgage insurance, or PMI. Whether it’s your first or fifth time buying a home, it’s an important term to understand before making your purchase.
With the number of home loans available that don’t require 20% down payments, you’re seeing more PMI. Freddie Mac describes PMI as an insurance policy that protects the lender in case you default on the loan. For every $100,000 you borrow, you’ll pay between $30 and $70 per month.
Once you reach 20% equity in your home, you can have your PMI removed. You’ll have to hire an appraiser to assess your home’s value, but the few hundred dollars you spend on doing that can save you thousands on the life of your loan.
Check out this link to learn more about PMI and how it works. Below, you’ll see a graph that demonstrates the difference between having a 5% down payment with PMI and having a 20% down payment with no PMI:
If you have any other questions for me in the meantime, don’t hesitate to give me a call or send me an email. I’d be happy to help you anytime, and I look forward to hearing from you soon.