Private Mortgage Insurance (PMI) is usually added to mortgage payments when the buyer doesn’t have the traditional 20 percent down payment required by Fannie Mae guidelines. PMI payments are included in mortgage payment until the buyer reaches 20 percent equity of the value of the home. It can add several hundred dollars a month to the mortgage payment and may not be tax deductible.

Until recently, the main way to avoid PMI was to “piggyback” a second mortgage, such as a home equity loan or home equity line of credit, to cover the difference between your down payment and the 20 percent required down payment. In today’s market, a more financially rewarding and appealing option to avoid PMI is to opt for lender-paid mortgage insurance (LPMI).

LPMI is a relatively new approach to avoiding a monthly PMI payment. To keep it simple and explainable, LPMI is prepaid PMI by your mortgage lender. In other words, your lender pays your entire PMI up-front and rolls the payment into your mortgage rate.The way it works is that the lender gives the home buyer a slightly higher mortgage rate for their home loan with LPMI.

click here for article

Real estate agent Caesar Parisi stands ready with effective advice on buying or selling a Boca Raton Country Club Community Home.

search for :