How to get preapproved for a loan without PMI
Most homebuyers were told that if you put down less than 20% that you need to pay PMI, but that isn’t necessarily true. The rules for financing a home purchase have changed and you can now put down as little as 3% and not have to pay PMI. We’ll explain how in this article, but first it is important that you understand what PMI is and who it actually protects.
What is Private Mortgage Insurance and who does it protect?
On a conventional mortgage, when your down payment is less than 20% of the purchase price of the home, lenders typically require you to pay Private Mortgage Insurance (PMI) to protect them in case you default. PMI is actually an insurance policy that the lender takes out on you in case you stop making your payments before reaching 20% equity in the home. On top of that, you are required to pay these insurance premiums even though you are not the beneficiary. In other words, if for any reason you stop making payments to your lender, the insurance company will step in to make those payments until you’ve paid 20% of the principal. The reason lenders typically require this private mortgage insurance is because they are reasonably confident that if the borrower stops making payments, the lender will be able to recoup at least 80% of the value of the home after a foreclosure. The private mortgage insurance will provide the difference between what you put down and 20%. PMI is the lenders way of protecting their investment.
PMI Calculator: How much does PMI cost?
Private mortgage insurance can cost anywhere from $50-$250/month. It really depends on two factors, the size of the loan and the borrower's credit score. Unfortunately, there is no simple formula to share that will determine your exact PMI fees. Lenders have a system they use to get your personalized quote. It’s all part of the home loan application process, which takes about 10-15 minutes to get started.
How can I get a new home loan with no PMI?
Meet the PMI Killers. A team of licensed mortgage professionals that together have closed over $1billion dollars in home loans.
Let the PMI Killers show you how to get a loan with as little as 3% down and no PMI payments. They’ve helped thousands of homebuyers just like you save money and make smarter financial decisions.
How do I get rid of my PMI payments?
If you already have a home and you are still paying PMI payments, reach out to the PMI Killers and ask them to help see if you qualify to get rid of those unnecessary payments. You can start a conversation with them by calling or texting 203-470-5434 or filling out this form.
Are you ready to apply for a PMI free loan?
It takes about 10 minutes on the phone to see if you qualify. Call us 203-470-5434 to learn more and discuss any questions you have or fill out the form below and we will give you a call.
