You’re considering buying your first Indiana home and are looking into your mortgage financing options. Then, your mortgage broker begins to talk about how you will require “PMI” and how those three little letters add to your monthly mortgage costs. What exactly is PMI?
Homebuyers who don’t have at least a 20 percent down payment on the cost of their new home are required by the U.S. government to take out private mortgage insurance—or PMI. According to Bankrate.com, “the insurance protects lenders in case the borrower defaults on the loan.” That PMI is in addition to your monthly mortgage premiums and interest paid on your mortgage loan.
If you were unaware of PMI or had forgotten to factor it into your home-buying budget, you’re not alone. Bankrate.com also says that “more than three in five people who bought a home in the past 10 years ended up with higher-than-expected monthly mortgage payments because of private mortgage insurance premiums, according to a recent survey by TD Bank.”
To determine whether you will need to pay PMI or to discuss options to avoid it, we recommend that you set up a meeting with your Indianapolis mortgage broker. GVC Mortgage is a local Carmel-based mortgage company. Our professional, experienced team of mortgage brokers can help you navigate your home mortgage, whether you require PMI or not. Feel free to call us with questions or to set up a consultation.