What is PMI and Do You Need It?

 

When we go house hunting, we tend to envision ourselves on HGTV’s House Hunters. We go into a few beautiful homes with an excited real estate agent and are dazzled by the squeaky-clean and fully-equipped kitchen, the spacious and comfy living room, and the luxurious master bedroom and bathroom. Our hearts are stolen away by a beautiful home that seems “just right” for us, and we set our aim on purchasing the home.

Unfortunately, buying a house is more involved and more difficult than one may think. With the cost of housing and an economy that’s still struggling, it can be hard for many people to pay even 20% or more on a down payment.

That’s where PMI (Private Mortgage Insurance) comes into play. PMI, or private mortgage insurance, is a form of insurance that basically allows you to purchase your dream home without having to come up with the full 20% down (or more).  Essentially, PMI helps you to pay less money for the time being so you can move into your new home sooner.

“Well, what IS PMI exactly?” you may ask.

PMI is a type of insurance that has been put into place to protect the lender so that they can recover their money even if the home is no longer worth enough to pay off the balance. In reality, there’s nothing in the PMI for you, (well, except a lighter wallet, maybe), which can seem overwhelming to a homebuyer.

However, in most cases it is a necessary and the reality is it only adds a few dollars to your loan payment with today’s interest rates and is well worth it to avoid spending all your savings to come up with 20% down.

If you’re considering purchasing a home or refinancing your current one it can seem like a lot to absorb. But don’t panic!  I’m here to walk you through it.

Just contact me at (618) 709-3821 or visit me online at www.loansbytammie.com! I can help you with all of your refinancing needs!