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57

Private mortgage insurance protects the lender if you stop making your mortgage payments. It does not benefit the borrower, aside from the fact that many lenders require it if your down payment isn't large enough. Paying for PMI is essentially paying for insurance to protect someone else's investment - if you're not required to do it, there is no possible ...


24

The best way to understand insurance policies in general is to consider who gets paid, and under what circumstances. Simply put, PMI policies pay your lender. The condition under which they pay is if you default, and the bank is not able to recover the balance of the loan. If you buy a house for $100,000 with $10,000 down and a $90,000 loan, and then you ...


18

Short answer: It probably makes sense to avoid the PMI (Private Mortgage Insurance), but it ultimately depends on how probable it is that you are unable to pay the monthly installments with/without the extra savings. Long answer: While i am not an expert on the specifics of the US mortgage market (I presume the question pertains to US), it seems that a ...


5

There are two reasons I can think of, but they both boil down to the reason that lender will give you a mortgage with PMI, and won't approve a loan without it. Assuming the lender requires PMI for all mortgages with less than a 20% down payment: If you can't come up with enough cash for at least a 20% down payment, you can either get the loan and pay the ...


5

If we get a loan from the bank for $250,000 to purchase a home valued at $315,000 will they require us to provide a 20% downpayment or pay for private mortgage insurance? You can use gifted equity as a down payment. For a conventional loan if the down payment is 20% or higher it can all come from a gift, if it's less than 20% then only some of it can ...


3

The benefit to the homeowner is that they get to buy the house with a lower downpayment than they would otherwise need. So to make up a case where you might reasonably want to pay PMI... Say it's just after the stock market crash of 2008. You have $50K in cash, you want to buy a house for $250K, but you also think that this would be a really good time to ...


3

I am self answering as I've worked this all through. Taking out a HELOC (Home Equity Line of Credit) on my property will not add PMI back to my mortgage My local Credit Union is willing to provide a HELOC up to the full appraised value of the home Due to current market demand this process is expected to take up to 6 weeks. I have since taken out a personal ...


2

I would add the 15K if you can afford it. Basically you are now getting 10% on your money, which is a great guaranteed ROI. Also you will never have PMI, which is a lot easier then having it removed. Some lenders make it very difficult. The longer you go until the PMI can be removed, the higher your rate of return. For example when you are close but ...


1

This is very confusing, however I think I understand it. If the buyer pays extra payments which accelerates the LTV to 80% or below before the scheduled date on the amortization chart, the lender can require an appraisal of the property to confirm property current market value. Unfortunately, an apprasal could cost the buyer $400 or more and the buyer must ...


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