Private Mortgage Insurance (PMI) is a requirement when putting less than 20% down. It doesn’t benefit the borrower-it benefits the lender. There are different PMI options that may save the borrower money.
Traditionally the borrower pays the PMI monthly which increases the mortgage payment. Another option is ‘Lender-Paid’ PMI where the lender – in exchange for a higher rate- pays the PMI. Even though the rate is higher, the overall payment may be lower. Other options include a split premium, one-time PMI and an 80/10 type loan. If you don’t have enough to put 20% down discuss your options with any one of the lenders that are members of MCPHO. You’ll be glad you did and may save money along the way!