Current Mortgage Rates

Saturday, March 20, 2010



On average, PMI may increase your mortgage payment by $100 - sometimes less, sometimes more. However, there are ways to avoid paying this additional insurance. The obvious involves having at least 20% as a down payment. If this is not an option, homeowner may agree to a higher interest rate. Another tactic entails getting approved for 100% financing. Sometimes lenders create unique options to avoid PMI in the first place. These special financing packages are referred to as 80/20 loans, 80-10-10 loans, or 80-15-5 loans. They include a primary loan amount not to exceed 80% of the home's value, plus one or more home equity loans to cover the remainder of the purchase price (minus whatever down payment the buyer is making).

In most cases, the interest rate will be higher on the secondary loans than on the primary loan. But the removal of PMI from the equation will lower the total monthly payments owed. Also, as you gain equity in your home by paying your mortgage every month, you'll later have the option of refinancing everything into one mortgage (possibly with a more favorable rate).

There are some simple methods to avoid PMI:
  • Buy A Home You Can Afford - If you buy a home you can afford, you are more likely to be able to come up with a down payment that is closer to twenty percent and you are more likely to build equity quickly and get rid of PMI down the line. Don't get seduced by keeping up with the Joneses - they are probably up to their eyeballs in debt.
  • Borrow Your Down Payment - If you can borrow the twenty percent to put down, then you should do it. Tap family or other resources. The interest rate on the loan will probably be far lower than the PMI you'll be stuck with for years.
  • Take Two Loans - A great way to avoid PMI is to take out two mortgage loans when you buy a home. Your first mortgage could be for eighty percent and the second mortgage could be for twenty percent. The great part about this solution is that you avoid PMI and you can pay down but keep your equity line open. This gives you low interest flexibility for future home improvements!





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Current Mortgage Rates*

Loan Type
National Average
30-yr. fixed5.25%
30-yr. fixed jumbo5.50%
15-yr. fixed4.38%
15-yr. fixed jumbo4.88%
7/1 ARM4.12%
5/1 ARM4.12%
3/1 ARM4.25%
1-yr. ARM2.88%
1-yr. LIBOR ARM4.50%
10/1 ARM4.75%
*Mortgage Rates Updated: 03/19/2010