Private Mortgage Insurance, or PMI, is an insurance policy paid by the homeowner to protect the lender in the event the homeowner isn't able to make payments on the home. For conventional loans, PMI is required when a home's equity percentage is less than 20%. This insurance exists because homes that default typically sell at auctions and may go for up to 20% less than the home's true value. PMI is called "private" because it is offered by private companies as opposed to the government. PMI automatically ends when a homeowner's equity reaches 20% of the home's value.
Ways to Avoid Paying PMI
The easiest way to avoid paying PMI is to put down 20% or more when obtaining your Lake of the Ozarks mortgage loan. Depending on the purchase price of your home, coming up with enough cash to cover 20% can be difficult. Don't worry though, there are plenty of options out there that allow lower downpayments, many of which also don't require PMI. Talk to your mortgage lender at the Lake of the Ozarks about first-time home buyer programs and other low-to-no downpayment options that you could qualify for. Here are a couple options to consider:
With favorable terms, competitive interest rates, and no monthly mortgage insurance premium, VA Loans are designed to make homeownership more affordable for qualified U.S. veterans. This option allows you up to 100% financing without having to pay PMI.
2. USDA Loans
Rural Housing loans, sponsored by the U.S. Department of Agriculture, are designed to make homeownership more affordable for borrowers in rural communities. For qualified borrowers, a Rural Housing loan can provide up to 100% financing with competitive rates and terms. This option also does not require paying PMI, even with little to no downpayment.
Your Lake of the Ozarks Mortgage Professional
When it comes to your Lake of the Ozarks home financing needs, Lakelender Michael Lasson is here to help! I'll discuss financing options, offer competitive interest rates and back it up with the first class service you deserve. Give us a call at 573-746-7211 to learn more about your mortgage options!
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Senior Loan Officer
NMLS #: 493712
4655 B Osage Beach Parkway
Osage Beach, MO 65065
Cell: (573) 216-7258
**The postings on this site are my own and do not necessarily represent First State Bank of St Charles’s positions, strategies, or opinions.