Your Lake of the Ozarks Mortgage Lender: avoiding private mortgage insurance

Wednesday, May 13, 2020

5 Things to Know About Mortgage Insurance

When you are purchasing a new home, one aspect to prepare for is mortgage insurance. Mortgage insurance can be a huge asset to homebuyers, as it can allow them to purchase a home without having to put the full 20% down. Here are a few things you will want to know about mortgage insurance as you go through the process of purchasing your next vacation home at the Lake of the Ozarks.

What is PMI (Private Mortgage Insurance)?

Generally, if your mortgage down payment is less than 20% you will be required to carry mortgage insurance. This isn’t to be confused with homeowner's insurance, as they are two separate points of coverage protecting from two different events. The basis of it is that if a borrower were to stop payments on their mortgage, the insurance company would make sure that the lender is paid.

Will You Need Mortgage Insurance?

If you are able to pay the full 20% down, you will not need mortgage insurance. One interesting aspect is that if you are required to purchase mortgage insurance when you first get your loan, you can often request to cancel it after a certain period of time, usually when your loan reaches a point that you have 20% equity in the property.

What Types of Mortgage Insurance Are Available?

There are commonly two types of mortgage insurance available, private and public. If you get private mortgage insurance, it means you have a conventional loan and that the insurance is obtained through a PMI company. If you have public mortgage insurance, it means that your insurance is bought from the government and is usually paired with a government loan, such as FHA. The mortgage insurance that you will be required to obtain will depend on the type of loan that you are choosing, but we can help you with this as we progress through your loan process.

How Long Do I Have to Keep the PMI?

As a general rule, you usually pay the insurance premiums until your loan-to-value (LTV) ratio hits 80%. The LTV is essentially the amount of money that you borrowed and then divided by the value of the property you bought. You can often cancel the mortgage insurance policy when you have 20% of the home’s equity built up!

How Much Does PMI Cost?

The premiums for a conventional loan can vary, but a good rule of thumb is that the lower your down payment, and/or the lower your credit score, the higher your premium will be. Generally, the premiums can range from $30-$70 per month for every $100,000 borrowed. However, on FHA loans, there are some additional fees. There is a UFMIP (up front mortgage insurance premium) as well as an annual premium that will be collected monthly. For VA loans, you will have an upfront fee, but no annual or monthly premiums, unless you are exempt from the funding fee.

It's a Great Time to Buy

If you have further questions about this, we invite you to fill out the application for a loan on our website (www.YourLakeLoan.com), and we can talk with you further about the details that are specific to you! We look forward to discussing your options when it comes to your financing needs, and we’re committed to working with you every step of the way.

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Michael Lasson

Senior Loan Officer

NMLS #: 493712

4655 B Osage Beach Parkway

Osage Beach, MO 65065

Direct: (573) 746-7211

Cell: (573) 216-7258

e-Fax: (866) 397-0318

Email: mlasson@fsbfinancial.com

Website: www.YourLakeLoan.com

**The postings on this site are my own and do not necessarily represent First State Bank of St Charles’s positions, strategies, or opinions.

Wednesday, November 16, 2016

Avoiding Private Mortgage Insurance

When you choose to become a homeowner, you're taking on more expenses than just a monthly mortgage payment. One of the those expenses could be private mortgage insurance (PMI). This type of insurance protects the Lake of the Ozarks mortgage lender if the borrower defaults on the loan. Keep reading to learn how you can avoid paying PMI on your home loan at the Lake of the Ozarks.

What is Private Mortgage Insurance (PMI)?

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:

1. VA Loans
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!

For Lake area news, resources and tips on financial services, please