If you’re a homeowner, then you’ve probably heard of private mortgage insurance (PMI). But what is it, and what do you need to know about it? In this blog post, we will discuss PMI and answer some common questions that homeowners have about it. So if you’re curious about PMI, read on!
Private Mortgage Insurance, or PMI, is a type of insurance that helps protect lenders in the event that a borrower defaults on their mortgage loan. It’s a requirement for most mortgages when the down payment is less than 20%, and varies depending on your loan amount and other factors.
The cost of PMI is typically added to the monthly mortgage payment and can range from around 0.3% to 1.15% of the loan amount per year, depending on factors such as credit score, loan type, and LTV ratio. Some borrowers are able to cancel PMI once they have built up enough equity in their home (usually around 20%), while others will pay it for the life of their loan. If you’re considering a home purchase where you won’t be able to put down 20%, be sure to factor in the cost of PMI when budgeting for your new home.
If you’re currently paying private mortgage insurance (PMI) on your home loan, there’s a possibility that you may be able to remove it by refinancing. Whether or not you’ll be eligible for this depends on several factors, including the value of your home and how long you’ve been making payments on your mortgage. If property values in your area have increased since you purchased your home, you may be able to refinance into a new loan that doesn’t require PMI.
Have additional questions? Send me an e-mail at edavis@guildmortgage.net. If I can’t help you out directly, I’ll point you in the right direction so that financing your dream home is a breeze!
