The Basics of Private Mortgage Insurance

Buyer

As you shop the new homes for sale in St. Johns County, you may also be looking into the different mortgage loans available. The majority of buyers in the market right now, especially first time home buyers, are preparing to put a big down payment on the home they choose to purchase. The down payment is an important part of the mortgage loan process, and it determines whether or not a buyer will be required to have insurance on their loan.

The bottom line is that if you are putting a down payment on your home that is less than twenty percent of the sales price, you will be required to purchase private mortgage insurance or PMI. Now that you know why you might have to carry private mortgage insurance on your St. Johns County property, you might also want to determine if there are other ways to avoid paying for it besides coming up with a twenty percent down payment.

How To Avoid Paying Private Mortgage Insurance

Although you may have been told that avoiding private mortgage insurance is next to impossible, that is not entirely true. There are actually two ways for you to avoid paying a PMI. The first is by paying a higher interest rate on your loan. There are some lenders who will waive the PMI requirement if you agree to the higher rate. Second, you can avoid a PMI with an 80-10-10 loan. This is actually two loans and a ten percent down payment. This type of loan program works out to cost less than one loan with an attached private mortgage insurance payment, so be sure to ask your lender or broker about this option.

Be sure to get all of the facts about your loan. Unfortunately, there are some loan programs which will require you to pay PMI for the entire life of the loan. Read the fine print so that you know what type of loan you are getting into.

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