A no PMI mortgage is a mortgage without Private Mortgage Insurance (PMI). It’s a viable option for homebuyers who aren’t able to put down a 20% down payment on a home (most lenders requires PMI for loans greater than 80% of a property’s value).
While PMI could be helpful, it has a few aspects that could be challenging for some homebuyers:
- PMI costs money: PMI costs homebuyers between 0.5% and 1% of the loan amount each year. For a standard $250,000 New York or New Jersey home loan, that’s $2,500 a year!
- PMI hangs around: Many lenders require payments for a certain period of time, or until you reach 20% equity in your home – which often takes years. That’s a lot of PMI to outlay!
- PMI doesn’t benefit you: The lender benefits from PMI, not you. The money you’re spending on PMI is money that you could otherwise save or invest!
For these reasons, if you can find a no PMI mortgage or lender-paid mortgage insurance (in which the lender pays the PMI in exchange for a small down payment), you should take it. Even though some no PMI mortgages have higher interest rates, they can still save you money in the long run.
Contact a Get A Rate mortgage expert
(or call us at 1-866-955-5655
) about no PMI home mortgages to find out if they’re right for you!