Private Mortgage Insurance

Now is one of the best times to purchase a home, as prices are the lowest they have been in a while. The 20% down payment you will need to start living in a house however, may not be sitting around in your banks account, however. Qualifying for a loan with Private Mortgage Insurance or Lenders Mortgage Insurance may be the best answer to having an affordable loan for home payments.

Private mortgage insurance, or PMI, has been made more affordable than normal home loans, as it allows for a smaller down payment on the house you want. Their prices range only from 3 to 5% of the house’s cost rather than a hefty 20%, making it easier for you to move into your house sooner.

PMI is a better option than choosing piggyback loans, which requires the use of another mortgage on a home you already have to make up what you don’t have for the home you want. But if you are a first‐time homeowner, then this is not an option for you; PMI can have you in your house more quickly.

Payments

The rates and payment options differ with each lender; some may require a monthly payment of $50 with a lower financing amount or some could have a price of $1,500 or higher yearly and require you to pay at loan’s closure.

The prices also vary because of various factors such as your credit score, the amount you wish to borrow, how long you will be paying off the loan, how often you will actually be occupying this house, and whether you choose to pay for the loan every month, annually, or all at once. There are other factors that go into your loan so be sure to understand what you need.

Benefits

In addition to the lower costs of PMI loans, if you sign your mortgage contract before January 1, 2010, you can receive a tax deduction to write off those PMI payments; however, your salary must be less than $109,000. Also, loans are made more predictable as the payments are fixed from when you sign the contract.

A law requires your lender to let you know when you no longer need the loan, which is when your LTV, or loan‐to‐value ratio reaches 80%, and then you have the opportunity to cancel your loan. Do this by paying down on your principle and/or raising your home’s value, and then submitting a proof of LTV through your home’s value appraisal.

If you do not respond when they let you know about your loan, then they are required by law to cancel it automatically when your LTV reaches 78%. If you do plan to cancel, however, you should know that you cannot have had a 30-day delinquency on your payment history within the past year, or a 60-day delinquency in the past two years.

Take advantage of Private Mortgage Insurance Loans and you will have what you need to move in, while having only affordable loans to pay off.