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Private Mortgage Insurance Hayden ID

PMI will cost you money. In most cases, you will pay a monthly premium based on the amount of outstanding mortgage debt. This can add up, so it is not necessarily a cheap alternative to saving up to buy a home. But, it does get you in the market sooner and with housing prices generally on the rise, sooner can be a good thing.

Landers Insurance
(208) 651-6208
1218 E. Sherman Ave.
Coeur d Alene, ID
Services
Auto Insurance, Health Insurance, homeowners insurance, life insurance, and Commercial Insurance

Insphere Insurance Solutions
(208) 691-4569
Alpine Dr
Post Falls, ID
Alternate Phone Number
208-691-4569
Services
Health, Life, Supplemental, Medicare

Landers Insurance
(208) 651-6208
1218 E. Sherman Ave.
Coeur d Alene, ID
Services
Auto Insurance, Health Insurance, homeowners insurance, life insurance, and Commercial Insurance

Pacific Crest Sevices, Inc.
(208) 938-4197
450 W State St
Eagle, ID
Alternate Phone Number
208-938-4197

Brunson Insurance
(208) 234-2727
1177 Call Place suite C
pocatello, ID
Alternate Phone Number
208-540-0817
Services
Farmers, foremost, bristol west,
Prices and/or Promotions
Free Quote! auto, home, life.

Family Home Care & Hospice
(208) 772-2112
1620 Northwest Blvd., Suite 201
Coeur D Alene, ID
 
Northwestern Mutual Financial Network
(208) 947-5238
1111 West Jefferson Street
Boise, ID
Services
Insurance, Investments and Retirment Services

Idaho Insurance Agency LLC
(208) 377-7101
1650 S Albright Lane
Boise, ID
Alternate Phone Number
(208) 377-7101
Services
Individual and Group Health Insurance

Shalom Farmers Insurance Agency
(208) 602-7892
2947 E. Magic View Dr
Meridian, ID
 
Three Rivers Insurance
(208) 454-1424
910 E Cleveland Blvd
Caldwell, ID
Services
car insurance, auto insurance quote, vehicle insurance, free online insurance quotes, rate quote, life insurance

Private Mortgage Insurance

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Private Mortgage Insurance


Private mortgage insurance (PMI) helps you get into a home faster. Why? Because it allows you to buy with less than 20 % down, but still reduces the risk to your lender so that you don't have to pay higher rates of interest.

Now why do lenders want 20% down? That magical 20% generally assures the lender that if the lender has to foreclose, the lenders loss will be completely recovered.

Having said that, if lenders exclusively gave mortgages to folks with 20% down, there would be a lot of us who would be renting. (My first home was purchased with mortgage insurance. I only had about 10 % down.) With so few people able to qualify to get mortgages, the demand for houses would be MUCH less.

Lets face it: saving up 20% of the purchase price of a home is a BIG chunk of money. Most of us would have a hard time doing it. If you were looking at buying a home worth $300,000 that would mean you'd need $60,000 in savings! It's a huge challenge.

So, what do you do? You get private mortgage insurance. Here are the basics of how it works: You get a policy. Then, you purchase your $300,000 home with less than $60,000 down (assuming you can qualify for the mortgage amount). Your PMI policy provides a guarantee to your lender that if you default, the insurance policy will compensate for much or all of the loss to them. And you become a homeowner.

In effect, you buy now, buy with what you have, and use PMI instead of a hefty down payment.

There are various PMI plans and they typically work like this:

  • The more you put down, the less coverage you need. In other words, more insurance is required with 5 percent down, less insurance with 15 percent down.
  • Adjustable-rate mortgages, ARMs, are perceived as more risky than fixed-rate loans, thus PMI costs are somewhat higher.
  • The borrower pays for PMI coverage, but if the loan is defaulted, the lender is the policy beneficiary.

You do have to keep in mind that it is possible for a lender to conditionally approve a loan, and also for a PMI company to decline coverage. It's best to have ensure you qualify for the mortgage amount as well as for PMI coverage before you start to shop for a home, if you want the best outcome.

PMI will cost you money. In most cases, you will pay a monthly premium based on the amount of outstanding mortgage debt. This can add up, so it is not necessarily a cheap alternative to saving up to buy a home. But, it does get you in the market sooner and with housing prices generally on the rise, sooner can be a good thing.

When does your PMI coverage (and premiums) end? This can depend on how aggressively you pay your mortgage. The HomeOwners Protection Act of 1998 (HPA provides that if the borrower has a good payment history, then once the original debt has been reduced 22 percent, PMI must be cancelled. Further, the rules also allow borrowers to request PMI cancellation after they have reduced their loans 20 percent.

However, ...

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