Avoiding PMI
Save Money on your Loan, Avoid PMI by: Travis Tomlinson
With gas prices soaring and bills piling up it is important to
save money any way possible. The same is true when financing a
home. All loans are not created equal. Some loans have costs
that you should avoid. One of those costs is PMI. In my opinion
you should avoid this cost whenever possible! Private Mortgage
Insurance (PMI) is insurance that the lender requires on loans
that have less than 20% down payment. This can cost you
somewhere between 80-200 dollars per month! This could put the
house of your dreams out of your budget. Luckily, in most cases,
there are ways around these extra costs.
The best way to avoid PMI is to find a lender with programs that
finance above 80% with out charging PMI. At Fifth Third Bank I
have the ability to finance loans up to 100% without charging
PMI. These loans do have guidelines that you must qualify for
but if you do meet the criteria then take it! You could end up
in your home with no down payment and no PMI. If you don't
qualify for these programs don't worry, there is another way!
You can also avoid paying PMI by doing an 80/20 loan. This type
of loan splits the financing up into two different loans. You
can think of this as borrowing money from the bank as a down
payment. You will be carrying two loans at two different
interest rates.
The first mortgage, which would make up 80% of the purchase
price, will be on a lower rate. The second mortgage will be on a
slightly higher rate, but your payment will be lower than
choosing a loan with PMI. The second mortgage is also tax
deductible. PMI is NOT tax deductible!
The name of the game is saving money! When you are shopping
around for a mortgage make sure you ask your loan officer about
special programs that avoid PMI. If you cannot qualify for these
then ask about their 80/20 programs. Mortgage shopping can be
confusing and frustrating, but it doesn't have to be. Find a
lender who wants to save you money. Good luck and happy
shopping!
Travis Tomlinson Senior Mortgage Loan Originator Fifth Third
Bank Cleveland, OH Phone: 216-476-5948
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