Why pay PMI when your lender can pay it for you?
Private mortgage insurance (PMI) is a term every homebuyer hears if he/she is buying a new home with less than a 20% down payment. Whether you are buying with an FHA or conventional loan, PMI is a necessity if you don’t have the cash to make that 20% down payment. PMI rates vary but expect a significant increase in payment if you are required to pay it monthly.
Lender Paid Mortgage Insurance
Lender paid private mortgage insurance is exactly that. Instead of you paying PMI upfront in a lump sum or monthly as part of your monthly payment, your lender pays it. Now, as you’ve probably guessed, this isn’t free. Your lender will offer you a slightly higher rate in exchange for paying the PMI. However, the payment increase resulting from the higher rate is almost always lower than the monthly PMI you’d be paying on your own.
As with all conventional loans, your down payment, credit score, and loan amount will determine how much extra interest you’ll pay with lender paid PMI. As always, talk to Angie about all options available to you and your specific situation.
Start chatting with Lucy, your 24/7 assistant and we will get working on letting you know your requirements for approval.