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Saturday, November 21, 2009
PMI plays an important role in the mortgage industry by protecting a lender against loss if a borrower defaults on a loan and by enabling borrowers with less cash to have greater access to home ownership. With this type of insurance, it is possible for you to buy a home with as little as a 3 percent to 5 percent down payment. This means that you can buy a home sooner without waiting years to accumulate a large down payment.
To illustrate, suppose you want to buy a house or condo. But you don't have any cash down payment. Don't let that stop you. Virtually every mortgage lender in town has a loan program for you (presuming you have decent credit and an income source). Thanks to the generous Fannie Mae and Freddie Mac 103 percent mortgages, you can even finance your closing costs if the mortgage doesn't exceed $333,700. That is where PMI comes in. One of the seven nationwide PMI lenders will agree to insure your lender against foreclosure loss if you default on mortgage payments.
To qualify, you must have good credit and good income. But PMI is not free. Although PMI premiums vary, they typically add $50 to several hundred dollars per month to the cost of a home loan, depending on the loan amount and the insurer's risk. PMI is underwritten by private insurers specializing in this unique insurance, which is arranged by mortgage lenders for their borrowers.
Another drawback is PMI premiums are not tax deductible like mortgage interest. For several years, PMI insurers have been lobbying Congress to make PMI premiums deductible, so far without success. Their argument is PMI helps increase home sales and the national economy, promotes home ownership and raises construction employment. But the counter-argument is PMI deductions would decrease income-tax revenue.
To illustrate, suppose you want to buy a house or condo. But you don't have any cash down payment. Don't let that stop you. Virtually every mortgage lender in town has a loan program for you (presuming you have decent credit and an income source). Thanks to the generous Fannie Mae and Freddie Mac 103 percent mortgages, you can even finance your closing costs if the mortgage doesn't exceed $333,700. That is where PMI comes in. One of the seven nationwide PMI lenders will agree to insure your lender against foreclosure loss if you default on mortgage payments.
To qualify, you must have good credit and good income. But PMI is not free. Although PMI premiums vary, they typically add $50 to several hundred dollars per month to the cost of a home loan, depending on the loan amount and the insurer's risk. PMI is underwritten by private insurers specializing in this unique insurance, which is arranged by mortgage lenders for their borrowers.
Another drawback is PMI premiums are not tax deductible like mortgage interest. For several years, PMI insurers have been lobbying Congress to make PMI premiums deductible, so far without success. Their argument is PMI helps increase home sales and the national economy, promotes home ownership and raises construction employment. But the counter-argument is PMI deductions would decrease income-tax revenue.
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Interest Only Mortgages
What is PMI?
Why do we need PMI?
Advantages and Disadvantages of PMI?
PMI Online Calculator
How to avoid paying for PMI?
What are the factors determining PMI rate?
How Do I Cancel PMI?
Where to find lower PMI?
Alternative to paying for PMI?
Questions About Homeowners Insurance
Interest Only Mortgages
What is PMI?
Why do we need PMI?
Questions About Homeowners Insurance
Interest Only Mortgages
What is PMI?
Why do we need PMI?
Advantages and Disadvantages of PMI?
PMI Online Calculator
How to avoid paying for PMI?
What are the factors determining PMI rate?
How Do I Cancel PMI?
Where to find lower PMI?
Alternative to paying for PMI?
Questions About Homeowners Insurance
Interest Only Mortgages
What is PMI?
Why do we need PMI?
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Current Mortgage Rates*
Loan Type National Average |
|
| 30-yr. fixed | 4.75% |
| 30-yr. fixed jumbo | 5.25% |
| 15-yr. fixed | 4.25% |
| 15-yr. fixed jumbo | 4.75% |
| 7/1 ARM | 4.38% |
| 5/1 ARM | 4.00% |
| 3/1 ARM | 4.00% |
| 1-yr. ARM | 3.62% |
| 1-yr. LIBOR ARM | 4.38% |
| 10/1 ARM | 4.62% |
*Mortgage Rates Updated: 11/20/2009