Our blog has a guest writer this week to help you out with your questions regarding PMI. Leslie Wish (CMPS), Senior Loan Officer with McLean Mortgage Corporation gives you information and guidance on this important detail relating to your mortgage:
Oftentimes buyers will come to me asking about mortgage insurance and why they have to pay it. To help you understand some of the extra costs associated with your mortgage, this is a breakdown of what factors determine whether or not you need mortgage insurance.
Private Mortgage insurance (PMI) is required by a lender if you make a down payment of less than 20% for conventional loans. This insurance protects the lender in the event a borrower defaults on a loan. The PMI can be paid as a part of your monthly mortgage payment, or as a lump sum at closing, or possibly rolled into your interest rate.
FHA loans require mortgage insurance (MI) regardless of your down payment amount. The MI is usually paid as an upfront lump sum equivalent to 1% of your loan amount. FHA also requires MI to be paid as part of your monthly payment.
Veteran’s administrations (VA) Loans do not require mortgage insurance. The VA does, however, require a funding fee, which is paid upfront in cash or financed into the loan amount. In cases where the veteran has a disability, the VA funding fee will be waived.
It is important to talk to a lender to figure out which program will best fit your individual situation.
I would be happy to assist you with all of your mortgage lending needs! Please email me at lwish@mcleanmortgage.com or visit me online at www.lesliewishmortgage.com so I can help you best determine which program works for you.
We hope you find this information useful!
Happy House Hunting!
