What is private mortgage insurance?
PMI is an insurance that is paid by the buyer when they are not putting down 20% of the purchase price. It is insurance that is paid to the lender in the case of default helping the lender recover a portion of the monies borrowed over 80%. PMI can be paid in several ways, included in the monthly payment, upfront as part of the closing costs, by the lender either through credit or a higher rate, or it can even be financed. Each route has its own benefits and it’s best to speak to a loan officer to determine which is best for you.
Will I need PMI?
If you have a conventional loan and you put less than 20% down you will have to pay PMI in some form. It will fall off once your loan balance is paid down to78% of the original value of the home when you purchased it.
How do I pay off a mortgage faster?
There are many ways to pay off a loan faster and not all require you to refinance. Most mortgages are simple interest meaning you can pay in extra at times or each month and the money goes directly towards the principal. This lowers your outstanding balance and cuts the interest you will pay on the loan. You can always look to refinance to a shorter term or lower interest if the market is better as well.