Private Mortgage Insurance (PMI) is lender’s protection in the event that a home buyer defaults on their mortgage. Typically, banks require at least 20% down for a home purchase. The purpose is to ensure that if the lendee defaults on their mortgage, the bank will be able to recoup its money back.
How Much Does PMI Cost?
The cost of PMI can vary. Most often it’s between 0.5% and 1.0% of the mortgage amount on an annual basis.
When you’re starting the process of buying a home, one of the most important decisions you’ll make is your mortgage selection. You’ll need to select the right one for your situation to ensure that you pay as little interest and fees as possible. However, this may be difficult if you’re new to the United States and purchasing a home for the first time, or even if you’re still building up your credit score. This guide to financing strategies will help you navigate the next step in your experience of buying a home.
If you’re purchasing a home for the first time, you may be overwhelmed by all there is to learn. From different mortgage types, insurance, taxes and more, your head is probably spinning. However, once you compare the different types of mortgage strategies to your situation, you will be able to determine which one is right for you, dependent on approval. There are many ways that you can decrease your mortgage costs to get ahead in the financial game.
Moves like these can sometimes affect interest rates for many loans, including home mortgages. With theaverage mortgage rate still hovering around 4% APR, if your mortgage rate is considerably higher, you may have an opportunity to save money now and in the future by refinancing.
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