Special article brought to you by Econ Mortgage

A common misconception when using a conventional loan to purchase a home, most people think you must put down a 20% down payment. The fact is that isn’t exactly the full truth. If you do choose to put less than 20% down, you will learn about a term called Private Mortgage Insurance.

What is Private Mortgage Insurance?
Private Mortgage Insurance is a type of insurance required by lenders when less than 20% is put down on a conventional mortgage loan. PMI is required on a loan where the loan amount/balance is above 80% of the value of the home. In 2020 estimated 2 million home buyers began paying PMI premiums. The next question you might be asking is how much will PMI cost me?

The Cost of PMI
Private Mortgage Insurance can be broken into monthly charges on the mortgage statement. The cost of PMI usually ranges from 0.5%-2% of the purchase price of the home each year based on loan amount and credit scores.

How do I get rid of PMI?
You may be asking yourself now that I have closed on my home, will I have to pay PMI forever? PMI doesn’t last forever, once you the loan balance is below 80% of the homes value PMI can be removed by the servicer.

In the past 2 years of the housing market many appraisal values have seen an increase. Many of our clients are refinancing their homes and with the increase in market values, many are now below this 80% threshold to have PMI removed from their mortgage.

Contact Econ Mortgage today for a free review of your mortgage to see if we can help you in removing your PMI cost to your mortgage.