Private Mortgage Insurance Options Explained- Boston Mortgage





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Published on Nov 20, 2013


Private Mortgage Insurance, otherwise known as PMI, is insurance that protects the lender in case the borrower is unable to pay the mortgage. The benefit of PMI to the borrower, on a conventional mortgage, is that you may typically buy a home with only a 5% down payment, instead of the traditional 20%.

There are two ways to finance your PMI. The first option is to build your PMI into the mortgage, this is known as "lender paid PMI". If you are planning a down payment that is less than 10%, "Lender Paid PMI" can be financially advantageous. WHY? While Lender Paid PMI typically has a higher interest rate, it will also help your monthly payments to be lower. Depending on your situation, this may be an excellent option for you.

The second option is to pay your PMI separately from your mortgage. In most cases, if your down payment is greater than 10%, it makes sense to pay the PMI monthly WHY? It is not worth taking a higher interest rate on a 30 year home loan, when you may only be paying PMI for just a few years.

If you have any questions on your particular situation and which PMI option is right for you, please give me a call, directly, and I will be happy to help you understand your options so you can make the best decision!- Boston Mortgage Lender & Home Loans


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