Mortgage 101: PMI
What is PMI, and why do some home loans require it?
If you're in the market for a new home, PMI is probably a term you've heard from your real estate agent or loan originator. PMI stands for private mortgage insurance, and it is designed to protect lenders if a house falls into foreclosure.
What that means for you: PMI allows you to buy a home without putting 20% down. The premium, a percentage of your original loan amount, is usually added in to your monthly mortgage payment. While that does increase your borrowing costs, it allows you to buy a home much sooner than waiting to build up a big nest egg.
Credit unions like Veridian generally have lower PMI premiums than for-profit banks, and in some cases they can be tax-deductible (consult your tax advisor about your specific situation). PMI will be automatically suspended as your principal payments accrue.
Veridian offers many mortgage types, including those with low or no down payment and options without PMI. If you're thinking about buying a home, schedule a free appointment to discuss your options with a mortgage loan originator today.