| "body"> | | | | when your loan-to-value ratio hits 80%. At this stage, |
| Getting loans for buying homes has become relatively | | | | you will need to contact your lender to cancel your |
| easy, but whichever property you buy, you'll need to | | | | PMI premiums. This means that you need to keep |
| make a down payment of 20% of its sale price. If you | | | | track on the principals of the mortgage. It is normal for |
| don't have this amount, you can obtain private | | | | people to do away with the PMI as soon as possible |
| mortgage insurance, which is commonly known as PMI. | | | | because PMIs are not tax deductible. |
| This is a win-win situation for both you and the lender | | | | Giver the nature of PMIs, it is best to avoid taking |
| because you will get the loan amount and the lender | | | | them. One of avoiding PMI is paying a higher rate of |
| will get the security for the payment of the loan. | | | | interest on your loan. If you agree to this, chances are |
| It is important to understand the concept of private | | | | that lenders will waive off the mortgage insurance |
| mortgage. Low interest rates have pushed up the | | | | requirement. |
| prices of property and therefore also the amount | | | | The second way involves two loans. This means that |
| required for down payment. Private mortgage | | | | you give a down payment of 10% and get 90% for |
| insurance bails out the homebuyers, but it is important | | | | finance. The 90% of the loan will be financed in two |
| to point out that PMI does not protect the homebuyer. | | | | parts. 80% loan will be treated as the first mortgage. A |
| Rather, it covers the mortgage company if the | | | | second mortgage will be applied to the remaining 10%. |
| borrower is not able to pay the due amount. | | | | Compare this to the PMIs and you will find that taking a |
| PMI buyers will require you to make an initial down | | | | second mortgage works out to be comparatively |
| payment, and then premiums for the rest of the | | | | cheaper. |
| amount on a monthly basis. This premium depends | | | | All said, you can buy PMI to bail yourself out of a |
| upon the down payment you make; the smaller the | | | | difficult situation, if you fall short of the down payment |
| down payment, the higher will be the PMI premium. | | | | amount required to buy property, but you must |
| Also, you must note that you can cancel your PMI | | | | consider other options before signing the dotted line. |