Private Mortgage Insurance Information from The JD Dorris Team at First United Mortgage in Owasso
Mortgage Insurance or PMI is a policy that protects lenders against losses that result from defaults on home mortgages.
PMI is a percentage of the loan amount, the more you borrow, the more PMI you’ll pay. If your down payment is less than 20% of your home’s purchase price, you will likely need to purchase PMI. After the equity in your property increases to 20% you no longer need the mortgage insurance.
PMI costs can range 0.25% to 2% (but typically run about 0.5 to 1%) of your loan balance per year, depending on the size of the down payment and mortgage, the loan term and your credit score. The greater your risk factors, the higher the rate you pay. Also, because PMI is a percentage of the loan amount, the more you borrow, the more PMI you’ll pay. There are six major PMI companies in the United States. They charge similar rates, which are adjusted annually.
Read more: Private Mortgage Insurance (PMI)
*FHA requires both upfront and annual mortgage insurance for all borrowers, regardless of the amount of down payment.