Private mortgage insurance is a pesky expense. However, there are ways to get out of having to pay it.
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I’m here today to answer the question of “What is PMI?” and give you tips on how you can avoid having to pay it.
Private mortgage insurance, or PMI, is an insurance policy that you pay anytime you have less than 20% equity in your home. Basically, it protects the lender if you default on your mortgage.
This applies to any conventional loan in which you have less than 20% equity. However, paying PMI is not always necessary. Here are a few ways to avoid it:
1. Put 20% down on your home purchase. This will automatically get rid of PMI, but it’s not always a feasible option.
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2. Paying PMI up front in the form of closing costs and lender credits.
The easiest way is to put 20% down on your purchase.
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3. Build up 20% equity in your home. Once you do that, you can call your lender and ask them to remove the PMI from your monthly payment.
4. Look at other loan programs. There are options out there that don’t require a PMI payment each month or a 20% initial down payment.
If you have any questions, don’t hesitate to give me a call or send me an email. I would love to hear from you.
