Online Calculator | Will I Have To Pay For Private Mortgage Insurance (PMI)?

Will I Have To Pay For Private Mortgage Insurance (PMI)?

Are you thinking about buying a home? It is a buyer’s market, because there are a plethora of homes for sale at great prices, and interest rates are still relatively low. Whenever you’re looking to buy a home, you don’t just have to worry about getting a loan that you can make timely payments on. Homes that are priced low now will likely rise back to normal whenever the market settles.  This means that you’ll need to pay more property taxes, so that’s more money to come up with. You may also be required to carry private mortgage insurance, so that’s another potential expense.

PMI is insurance that lender’s sometimes require in order to protect their money in case your home is foreclosed. You may think you’re getting a bargain when your realtor quotes you a small downpayment and affordable monthly payments, but many of them avoid telling buyers that if they only pay a little down, they will most likely have to carry PMI which is going to be tacked onto their monthly payments. Lenders have been left carrying the bag in many instances during the foreclosure crisis, and they want to be assured that if they have to foreclose on you, they’ll be able to sell the property and make up any shortfall between the selling price and the outstanding debt. Thus, PMI.

There are some situations in which you won’t have to worry about PMI. You won’t have to worry if you make a downpayment worth 20% of the home value or if you take out a FHA or VA loan. You typically don’t have to worry about PMI if you equity is above 20%. Equity is the difference between the amount you still owe and the current value of the home. With the recent drop in home prices, many people have found themselves “under water”, because they ended up having a negative equity in their home. When you owe more than the home is worth, you have negative equity.

It’s best that you discuss it with your real estate agent or lender to see if you’re required to carrying PMI.

Mortgage companies in the Madison, Wisconsin area are not hard to come by. Quality mortgage companies can be difficult to find. For the lowest rates and never any hidden fees, visit Easy Mortgage Company’s site here: mortgage rates Fitchburg or at Mortgage rates in Madison.

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