MORTGAGE TIPS: 5 Strategies On How To Avoid PMI Without 20% Down

MORTGAGE TIPS: 5 Strategies On How To Avoid PMI Without 20% Down

– If you're thinking about buying a house for less than 20% down, then
this is the video for you. (upbeat music) Welcome home. My name is Justin, your local
Bronx real estate agent. And if you're a first time viewer and you wanna get weekly tips on the home selling process
or home buying advice, be sure to slam that subscribe button and the bell next to it so
you don't miss anything. With that being said, today we're talking about PMI, specifically what is it? What does it require? What does it cover? What does it cost? And five different ways you can avoid it when buying a home. Stay tuned to the end
because the fifth way, I think you're really gonna like. Conventional loan PMI what are we talking about? PMI stands for private mortgage insurance. Okay, now we hear insurance,
we're thinking now what does it cover? So what does private
mortgage insurance cover? Well, not you or me, it's for the bank, in case we can't pay back our loan.

The cost of PMI is gonna vary, a lot more will depend
on your credit score and your down payment, However you see it in
like the half percent or percent and a half range, oftentimes. (instrumental music) So a lot of people are like, "Hey, is there a way for me
to put down less than 20%? When it's typically require
that I have to pay PMI and still not have to pay PMI?" That's why we're here today. Now before we get into
these five different ways to get out of PMI
without putting down 20%, you might have questions
about the FHA loans and their mortgage
insurance premiums, MIP.

Similar concept pretty much, but the way it operates is a
little bit different than PMI, and there's some different
stipulations around it. So if you have questions or
interested in the video on that, drop it in the comments below,
I'd be happy to cover it. First way we can avoid
private mortgage insurance with less than 20% down, is
lender paid mortgage insurance. It is what it's called. So the lender's gonna pay
your mortgage insurance on your behalf. However, there's usually a trade-off. So typically they charge
you a higher interest rate, you definitely wanna check the numbers to see what makes most sense for you. Number two, the piggyback loan. Piggyback, I know. Second mortgage, that's
what we're talking about. So you know how typically you have , one mortgage and your down payment, and that covers your purchase. Well, in this case it's gonna be, the first mortgage, let's say 80%, that's your borrowing. A second mortgage for 10%
that you're also borrowing and then the 10% down payment
that you're providing.

Now between your down payment
and your second mortgage, you have 20% down. So in that case, you've avoided mortgage insurance. However, trade-offs. Well with a second mortgage, now you're looking at
two sets of closing costs because you're closing
on two different loans, and also a higher
interest rate most likely on that second mortgage
that you're gonna have. So definitely just like
you wanna run the numbers, when its the lender
paid mortgage insurance, we wanna run, run, run the numbers, if we're talking about
doing a second mortgage, versus paying for mortgage insurance. We wanna see what works best for you. Third option, low down
payment programs with no PMI. So a lot of banks are offering these, a lot of times on a rotating basis.

avoid pmi

Saying that they have
these mortgages available that you can put down less than 20% and still not pay any mortgage insurance. How accurate that is? I don't know. You know I'm sure there's
no mortgage insurance, but what is the trade-off that
they're getting in return , for providing this benefit? I think there's something. Probably a higher interest rate. And this might just be
a matter of branding. But if you do see a
bank that's offering it or you find a program, check it out.

See if it makes sense for you. Fourth option, VA loans. So if you're a veteran and you qualify for the VA loan, great. You have no PMI to worry about, they don't charge it, right? Plus you have zero percent down payment, you've got capped closing costs, I mean, there's a lot of
good things about VA loans. So if you qualify to use one, and you wanna use one, you know, a residence that you're getting, this is a great time, especially if you're
putting down less than 20%, Because then you don't have to worry about that extra monthly charge that benefits the bank and not you.

Fifth way to avoid PMI
with less than 20% down, my personal favorite, down
payment assistance programs. So there's a ton of programs out there, they can give you money
in the form of grants, they can give you money in
the form of forgivable loans, it functions like a grant, as long as you follow the guidelines. So there's different
ways that it can be done. But this money can help you
get over that 20% threshold. So you don't have to worry about mortgage insurance in the long run. That's gonna save you money. If you wanna learn more about the different down payment options and resources available to you, programs that you can use right now, there's another video up
top that you can check out.

Of course, if you know
anyone that would benefit from this video, please be
sure to share it with them. Lastly, make sure to slam
that subscribe button so you can keep getting
the real on real estate. Thanks again and I'll see you next time..

As found on YouTube

Looking to see what kind of mortgage you can get? Click here to see

Leave a reply

Your email address will not be published. Required fields are marked *