3 Things You Need To Know About Private Mortgage Insurance

Dated: 10/24/2019

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Thanks to Dennis Vicars of Premier Nationwide Lending for his article that prompted this blog post.
 
  You may have heard the popular idea that a 20% down payment is required in order to buy a home.
If you aren’t financially prepared to put 20% down -and most homebuyers are not- you’ve probably been introduced to some of the programs that allow you to pull together a smaller down payment (or even no down payment!) and still end up as a homeowner. Just as important is learning about what comes with those other finance options. That is specifically Private Mortgage Insurance (PMI). Here are three things to make sure you know about PMI.
  1. What it is. Understand what Private Mortgage Insurance is and how it works. Mortgage companies require this to mitigate their risk when accepting less than 20% down.

  2. How to cancel it. As you pay down the principal (balance owed) on your mortgage and as your home's value increases, you will at some point have at least 20% equity in their home. You can then work with your mortgage professional to cancel PMI, reducing your monthly expenses.

  3. PMI may be tax-deductible. Know that depending on the specifics of your loan, your PMI payments could be tax-deductible (which could save you hundreds of dollars a year.) Be sure to consult a tax professional.

Reducing the amount you have to put away for a down payment can make the difference between whether or not you are able to buy a home. Your REALTOR®/agent should be you putting you in contact with the mortgage professionals who can help to fully educate you on the ins and outs of PMI. The monthly payment (principal and interest + escrows) is obviously important, but you need to know your mortgage commitment completely to make a wise decision. Call me if you have any questions: 225 921-9777. Rest assured that 

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