Private Mortgage Insurance (PMI)

Private Mortgage Insurance (PMI)
In the event that the borrower does not have a twenty percent (20%) down payment, lenders will allow a smaller down payment, sometimes as low as 5 percent. With the smaller down payment loans, however, borrowers are usually required to carry private mortgage insurance. Private mortgage insurance will require an initial premium payment of 1.0 percent to 5.0 percent of your mortgage amount and may require an additional monthly fee depending on your loan’s structure. As an example, a $75,000 house with a ten percent (10%) down payment, would require either an initial premium payment of $2,025 to $3,375, or an initial premium of $675 to $1,130 combined with a monthly payment of $25 to $30.
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