How to Avoid Mortgage PMI


For most companies in the United States, PMI is a must if the loan is more than 80% of the value of the home. In other words if you are not able to pay off more than 20% of the value of the home as down payment, you will have to pay a lot more monthly payments in the form of PMI. This is the insurance for the company incase you are not able to pay off the value of your loan. You do not have to pay PMI; this article will give you ways of avoiding the payment of PMI.

First of all, you need to figure out if you can afford 20% of the value of your home. Be realistic; ensure that you have left some money for contingencies and other plans. A good percentage of home buyers are not able to pay off the 20% with what they have at hand and may have to borrow some money etc. whichever way you can, ensure that you can pay off 20% of the value of the home beforehand. Save up, cut down on your costs, ask for some money from friends and relatives…anything to ensure that you have the 20%.

The other alternative is to obtain a second mortgage on the property. If you are not able to make the 20% a second mortgage may be able to help. Applying for a loan from a bank to meet the 20%, as this will guarantee that you pay off the mortgage.

Talking to the lender will ensure that you have your PMI removed. You can negotiate with the lender if you have to pay the PMI because you cannot pay 20%. What will happen is the removal of your PMI but the increase in the rates of repayment. In other words, the amount you have to pay off every month will increase, but at least you will pay less in the long run compared to when you had the PMI.

Another option is paying off the PMI in one single payment in what is called the single-payment mortgage insurance. This is one of the ways of avoiding the monthly budgets. The single payment mortgage insurance is always available for most people and can be paid off by the lender if you talk to them. You will have paid less than 20% of the value of your home as down payment but you will have the benefit of no monthly obligations in the name of PMI.

Be Sociable, Share!
homeowners insurance quote