Why Do I Have To Pay For Private Mortgage Insurance (PMI)?

Buyer

Often when purchasing a home there are surprise fees that you will be expected to pay. For some people, one of those unexpected expenses is Private Mortgage Insurance, also known as PMI. PMI is a fairly new concept to most potential home owners, as the need for it has arisen mostly due to the credit and mortgage “crisis” we are facing in our nation’s economy. If you have decided to purchase one of the many Jacksonville homes for sale, you may be stuck paying for Private Mortgage Insurance.

Who Has To Pay For PMI?

If you plan on putting less than twenty percent of the cost of your home up as a down payment on your mortgage loan, you can expect to pay for Private Mortgage Insurance. The majority of home buyers looking for Jacksonville real estate do not have enough money to put twenty percent toward a down payment, so they incur the extra money for PMI. Unfortunately, PMI is expensive. You can end up paying an extra sixty to a hundred dollars on top of your regular mortgage payment for the PMI, and in some cases it is even more than that.

Ways To Avoid Paying For PMI

There are several ways to get around paying for Private Mortgage Insurance. One sure way is to save enough money for a twenty percent down payment. If that is not an option, you can try a piggyback loan. This basically works by getting two loans, each within a couple of days of each other. Typically, one is for eighty percent of the price of the house, and the other is for twenty percent. This is called an 80-20 loan. There are variations of this such as 80-10-10, where you may obtain one loan for eighty percent, one loan for ten percent, and then you put down ten percent of your own money. If you want to avoid paying PMI, work with your banker to come to a solution that works for you.

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