PMI!
PMI is Private Mortgage Insurance on a conventional loan. For an FHA loan it is called upfront MI and MIP.
First conventional loans. Any loan where you put less than 20% down requires the borrower to pay PMI.
There are lender paid optoins, and borrower paid options. The most common is borrower paid monthy. This amount is calculated using your credit score and the loan to value. They also now give some break for having another borrower on the loan. It is a small break.
The higher the loan to value and the lower the credit score the higher the cost of the PMI.
So if your credit score is low and you have little to put down FHA may be the best loan for you.
FHA has two parts to mortgage insurance. There is an upfront amount that is financed as a lump sum with the loan. This is 1.75% of the loan amount. Then all loans have a monthly mortgage insurance premium. Whether you have an 800 score or 600 score on FHA the cost of this is the same. So please make sure the mortgage professional shows you all options you have.
The only way to get ride of PMI for FHA is to refinance. Please call today and we can look at if that would make sense for you.
Now the goal is to get ride of PMI. On a conventional loan after you have paid down the principle balance to 80% of the purchase price this goes away. That requires you to do nothing. The other way is to call us and we can look at ways to refinance and get ride of PMI.
Look forward to speaking with you and answering any questions.
Vaki: 704-651-3382 Steve: 704-421-1606