Ever wonder what Mortgage Insurance is and why you need it?
Our preferred lender Mike Filan, VP at First Heritage Mortgage is here to explain.
When homebuyers are learning about financing their new home mortgage insurance is frequently a topic of interest. Private Mortgage Insurance (PMI) is a premium that is required if an individual is putting less than 20% as a down payment. This protects the lender/investor in case the loan defaults and the possible fluctuations in the property value. Mortgage Insurance is typically thought of as a monthly premium that is paid as part of the monthly mortgage payment but can also be paid in a single premium at closing or the premium can be financed into the loan in the form of a slightly higher interest rate. One way to avoid paying mortgage insurance is to do a first mortgage at 80% and then to do a second loan for the remainder of the financing. This allows a buyer to avoid paying PMI but can often times end up as a higher monthly payment depending on interest rates for the 1st and 2nd loans.
There are a number of things to consider when financing so please reach out and see how I can help you explore the options and differences to see which financing program is best for you!
Ready to start the home buying process? Learn more about The Casey Samson Team Expert Buyer Program.