Today we are going to talk about what PMI is, what it does, and how you can get rid of it.
PMI stands for private mortgage insurance, and it protects lenders against a buyer not paying their mortgage or the monthly fees associated with it. If you are a homebuyer and put less than 20% down on a conventional mortgage, you will have to pay PMI. After you do have 20% equity on your home, you can actually get the PMI removed from your mortgage.
The cost of PMI will vary based on your loan-to-value ratio, your down payment, and more. The average cost is $30 to $70 per month per $100,000 of your loan. According to the National Association of Realtors, the average down payment last year for homebuyers was 10%. For first-time homebuyers, that drops to 5%, where the second-time buyer average is up to 14%.
PMI isn’t scaring buyers to come in and buy, nor should it. The bottom line here is that whether you are thinking about buying a home now or five years down the line, please give us a call or send us an email. We can give you an honest assessment of where the market is, what your financial picture looks like, and get a game plan started to put you in the best possible position to buy a home.
If you have any questions or need any assistance, please feel free to give us a call or send us an email. We look forward to hearing from you soon.