How To Avoid Paying Private Mortgage Insurance without a 20% Down Payment
Can you avoid paying PMI without a down payment? Yes, you can!
We have a customer scenario to demonstrate how:
She’s found her family dream house, a 3 bedroom 2 bathroom in Rutland Town with a large porch and a backyard for $159,600. She’s been to her lender and is considering a mortgage for 97% of the value of the house.
Because she isn’t able to bring 20% of the value of the home to the table, her lender considers her a riskier borrower.
This means her lender adds a Private Mortgage Insurance (PMI) payment to her monthly mortgage to protect the lender in case Lori stops making payments.
Private Mortgage Insurance Protects Your Lender…Not YOU!
Lori understands why her lender considers her a riskier borrower, but she would rather not pay insurance that doesn’t protect herself or build equity in her home. Luckily, Lori heard about a second option: a Down Payment Assistance Loan.
Down Payment Assistance
Lori heard about a Down Payment Assistance Loan from NWWVT, a second mortgage that will build equity as she pays it off and let her avoid PMI payments.
This makes her a less risky borrower to her first lender because she can now bring 20% of the purchase price to the table.
It also saves her money- she is now investing in her home with those monthly payments instead of paying Private Mortgage Insurance.
Think of it as the difference between paying a landlord rent or being a homeowner– at the end of the fifteen years Down Payment Assistance Loan term, Lori will have equity built in the home that she wouldn’t have if she were paying Private Mortgage Insurance.
In Lori’s case, she’d be paying just $27 more a month, avoiding PMI, and growing equity in her home with a Down Payment Assistance Loan!
Call our Lender today and find out if the Down Payment Assistance Loan makes sense for you.
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