What Is Private Mortgage Insurance PMI

Dated: 11/19/2016

Views: 139

Freddie Mac defines PMI as:

“An insurance policy that protects the lender if you are unable to pay your mortgage. It's a monthly fee, rolled into your mortgage payment, that is required for all conforming, conventional loans that have down payments less than 20%.

Once you've built equity of 20% in your home, PMI can be cancelled and removed from your mortgage payment.”

As the borrower, you pay the monthly premiums for the insurance policy, and the lender is the beneficiary. Freddie Mac goes on to explain that:

“The cost of PMI varies based on your loan-to-value ratio – the amount you owe on the mortgage compared to its value – and your credit score, but on average you can expect to pay somewhere between $30 and $70 per month for every $100,000 borrowed.”

The National Association of Realtors, stated that the average down payment for all buyers last year was 10%. For first-time buyers, that number dropped to 6%, while repeat buyers put down 14% (no doubt aided by the sale of their home). As you can see, PMI did not stop these buyers from buying their dream homes.

Key Takeaway: The larger your down payment on a house, the lower your monthly housing cost .

Marvette Cofield

Your real estate journey should be an AWESOME experience, if not, I have not done my job. Success is defined by my client’s satisfaction when they achieve their specific real estate goals. I take gr....

Latest Blog Posts

6036 Buttercup Ct Alexandria VA

 Look no further! Here is your new home at $433,990. Completely updated. New Kitchen, New Bathrooms, New Windows, new water heater and sump pump. There is no work that needs to be done.

Read More

Oct 15 2017 37666 1

Family Matters: The Pros and Cons of Selling Your Home to a Family MemberIt can be a stressful experience to put your home on the market and wait for offers in the hope that you've priced it.

Read More

4 Reasons To Sell This Fall In Prince William County

Some Highlights: •Buyer demand continues to outpace the supply of homes for sale! Buyers are often competing with one another for the listings that are available!•Housing inventory is still

Read More

You Dont Want To Hear This From Your Listing Agent

You Don't Want to Hear This from Your Listing AgentYou’ve decided to sell your house. You begin to interview potential real estate agents to help you through the process. You need someone you

Read More