Private Mortgage Insurance - a recurring, monthly, unwelcome guest. It sounds similar to and is about as welcomed as a similar acronym. PMI is private mortgage insurance. This insurance policy is paid for by the homebuyer when the amount of their primary mortgage is greater than 80% of the value of the property.
You will note that the term "primary mortgage" was used. It is not the total of all mortgages and home loans on the property that is evaluated, but rather the amount of the primary or largest mortgage on the property that can trigger Private Mortgage Insurance.
Private Mortgage Insurance is calculated by taking 0.5% of your primary loan balance and dividing it by 12 . For example, if your primary mortgage is $200,000 and you are required to pay Private Mortgage Insurance, your mortgage payments would be an additional $83.34 per month. For most homebuyers, this additional premium is a considerable financial burden to undertake.
There are ways around Private Mortgage Insurance for those homebuyers unable to put down 20% or more on their new home. Mortgage lenders have created loan packages which include two or more home loans that when combined exceed the 80% threshold, while no one of the loans exceed that threshold.
Typically there is a primary mortgage and either one or two home equity loans taken out simultaneously which are 81% - 100% of the home value. This affords the homebuyer to put less than 20% down, or perhaps put nothing down at all while at the same time eliminating the need to pay Private Mortgage Insurance.
You will note that the term "primary mortgage" was used. It is not the total of all mortgages and home loans on the property that is evaluated, but rather the amount of the primary or largest mortgage on the property that can trigger Private Mortgage Insurance.
Private Mortgage Insurance is calculated by taking 0.5% of your primary loan balance and dividing it by 12 . For example, if your primary mortgage is $200,000 and you are required to pay Private Mortgage Insurance, your mortgage payments would be an additional $83.34 per month. For most homebuyers, this additional premium is a considerable financial burden to undertake.
There are ways around Private Mortgage Insurance for those homebuyers unable to put down 20% or more on their new home. Mortgage lenders have created loan packages which include two or more home loans that when combined exceed the 80% threshold, while no one of the loans exceed that threshold.
Typically there is a primary mortgage and either one or two home equity loans taken out simultaneously which are 81% - 100% of the home value. This affords the homebuyer to put less than 20% down, or perhaps put nothing down at all while at the same time eliminating the need to pay Private Mortgage Insurance.
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