What is PMI? As a Realtor who deals with this everyday it is easy to forget not everyone knows what PMI is and how to avoid paying it.
PMI- stands for Private Mortgage Insurance. This is a way to insure that the lender will not lose if you walk away from your mortgage before you have built up sufficient equity in your home to cover the loss. When is PMI assessed? It is assessed when a borrower chooses to put down LESS than 20% on a home. As it has become common practice to purchase homes for a small down payment, often 3% +/-..the fact that your loan will contain PMI is almost a given. Once a buyer indicates that they intend to put down 20% on a home purchase all talk of PMI goes out the window. This is important to know up front, where you fall in the purchase realm, as the cost of PMI affects how much your monthly payment will be as well as your closing costs, as you will need to make an initial premium payment as part of your closing costs.
Less than 20% = PMI a must
20% down = NO PMI
Where do you want to be???
Call us today at Avery Realty Group/Avery Properties today to find your next home!