Many people wait for so long to buy a house. Some of them aren’t even able to buy it for decades. Well, that is exactly why you need to know more about PMI!
After reading this article you will realize how private mortgage insurance makes buying a house possible with just a 3% down payment of a conventional mortgage. We all know how people usually need to pay even 20% of down payment.
What is PMI of Private Mortgage Insurance?
PMI or private mortgage insurance is the one that protects everyone who isn’t actually able to make payments on a loan. No one wants to end up defaulting, right? Everyone who needs some help with a down payment will have huge benefits of private mortgage insurance because, as said above, it lowers it at 3% down.
How Much Does PMI Cost?
How much does PMI cost? The amount you will need to pay will be made from your actual credit score, and of course, determined by your down payment as well.
There are some other factors that can change the amount you need to pay, such as a state you live in (different risk grades), type of property and occupancy, connection between ARM and your fixed rate, number of units and borrowers and so on.
Where Did Mortgage Insurance Come From?
Not sure where did mortgage insurance come from? Imagine how people lived before the 1950s. Many of them weren’t able to buy a house because they had down payments of 50%.
Besides that, they also needed to pay everything within just five years. That is exactly why many of them stood renters for their entire lives. Yet, in 1957, there was the first company opened for this purpose.
That private mortgage insurance company helped people get better options when it comes to buying a house. Cheaper alternatives were made and from that time, this type of insurance just continued to improve.