Private Mortgage Insurance 101

Private Mortgage Insurance 101

Whether you like it or not, protecting your home and making sure it’s in perfect condition is one of the most important things in the world. It may not always be easy or cheap, but it’s simply a must if you want to have a great life and stop worrying about what might happen while you’re not at home. This is why so many people are looking into private mortgage insurances and trying to make their homes and their lives even more protected that way. In case you’re wondering what PMI is and how it works, here are some of the things you need to know.

What Is PMI?

What Is PMI

In short, private mortgage insurance is the insurance you have to pay to your mortgage lender in case the down payment for your new home is less than 20% of the full purchase price of that home. This is not an option all homeowners go for, especially those who are in a position to pay for their property immediately or go for a down payment that’s more than 20% of the price. However, some people simply aren’t in this position and they have to choose a financially problematic mortgage, and that’s why they should get ready for PMI in advance. Of course, you can always try to avoid it, but if you have no other options, paying for PMI is something you need to do ASAP.

How Much Does It Cost?

How Much Does It Cost

Not all private mortgage insurances are the same and, therefore, not all cost the same. Different companies have different standards when it comes to PMI, and once you’ve realized that you’re going to pay it, the next step you have to take is figuring out how much that’s going to cost. Most people believe that this is hard to calculate, but it’s not – your PMI is connected to your credit score, your down payment, the cost of your property, and the loan you’ve opted for. In most cases, it’s somewhere between 0.3% and 1.5% of the amount of your loan, which doesn’t sound like a lot at first, but don’t forget that you’ll have to pay for PMI every single day! Another thing you shouldn’t forget is that this amount of money has nothing to do with your mortgage and the interests you’re already paying, which means it’s the extra cost you have to take into consideration.

Can I Refund My PMI?

Can I Refund My PMI

This is another important question that bothers people across the world, no matter where they live, how big their properties are, and how much mortgage they’re dealing with. Refunding your PMI sounds like the best idea in the world, particularly for those who could use every cent they could save, so don’t be afraid to look into this issue today. Yes, refunding your PMI is possible, but under certain conditions and not in all situations. If you want to be sure you’re doing everything right, you might consider talking to experienced insurance refund professionals who will help you get all the answers and, more importantly, all the money you’ve been wasting over the years.

Can I Stop Paying PMI?

Can I Stop Paying PMI

Here’s another crucial thing you have to know, and, luckily, another positive answer. Yes, you can stop paying for your PMI – again, if you meet certain conditions. There are several ways to do that:

  • if you pay down your mortgage,
  • if the loan-to-value ratio reaches 80%,
  • if you refinance your mortgage, or
  • reappraise your home after boosting its value.

As you can see, PMI is something you can avoid and escape, but only if you think twice before putting an offer on your new home. So, if you want to avoid complications and problems, do that, and don’t worry about PMI!

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