Your Lake of the Ozarks Mortgage Lender: Understanding Private Mortgage Insurance

If you're in the market to buy a new home at the Lake of the Ozarks, you've likely heard of private mortgage insurance or PMI. Many prospective homeowners, however, don't necessarily understand what it is or how it works. Today's blog from your Lake of the Ozarks mortgage lender dives into private mortgage insurance to get your questions answered.

What is Private Mortgage Insurance?

Private Mortgage Insurance, or PMI, is an insurance that protects the lender if the borrower stops making payments on their loan. It ensures the lender doesn't lose money if the borrower's house ends up in foreclosure. On the buyer's side, it's beneficial because it allows you to purchase a home sooner, without having to wait to save up a hefty down payment. It's important to understand that this insurance does not protect the borrower in the event that you run into problems paying your mortgage. PMI rates can vary from person to person and are varied depending on different factors, including, but not limited to debt-to-income ratio, credit score and loan-to-value amounts.

How Does PMI Work?

If you purchase a home with less than a 20% down payment, PMI will likely be required by your mortgage professional at the Lake of the Ozarks. The PMI premium payment is included in your monthly mortgage payment, in addition to your principal, interest, property tax, and homeowners insurance. In most cases, you can cancel your PMI insurance policy once you have built up enough equity in your home. Be sure to contact your lender once you've reached that point to discuss removing the premiums from your monthly payment.

As your local mortgage professional, I'm here for all your Lake of the Ozarks home financing needs. I'll discuss your options, address your concerns, offer competitive rates and back it up with the first-class service you deserve. Whether you're in the market for your first home, a new home or to refinance your home at the Lake of the Ozarks, I'm here to help! Give me a call at 573-746-7211.

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