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What Is PMI?
PMI is extra insurance that lenders require for loans that are more than 80 percent of their new home's value. In other words, buyers with less than a 20 percent down payment are normally required to pay PMI.
Benefits of PMI
PMI is an important ingredient to the lending process. PMI protects a lender against losses if a borrower defaults on a loan - and it allows borrowers greater access to homeownership. It is possible for you to buy a home with as little as a 3 percent to 5 percent down payment. This means that you can buy a home sooner without waiting years to accumulate a larger down payment.
How much does mortgage insurance cost?
The cost of PMI is divided into two parts. The first part is a payment made at the time of closing. The second is an ongoing payment made each month with your principal and interest payment.
Do you offer any alternative to mortgage insurance?
You definitely have options; this is a good time to contact one of our professionals – for more information pertaining to your personal needs and goals.
Mortgage Insurance Alternatives
Lender Paid Mortgage Insurance
Borrower Paid Mortgage Insurance
Cost included in the interest rate
Lower monthly payment
Larger tax deduction
Bigger savings over other mortgage insurance options
Best for those:
Who are likely to move or refinance within ten years
With a longer term mortgage
Making a down payment under 15 percent (or less than 15 percent equity if refinancing)
Wanting to reduce monthly payments
Needing a larger tax deduction
Premium added to monthly mortgage payment
Higher monthly payment
No tax deduction
Option to cancel
Best for those:
Who are likely to remain in their home without refinancing for more than ten years
With a shorter term mortgage
Making a down payment over 15 percent (or at least 15 percent equity if refinancing)
Willing to make higher monthly payments in exchange for the option to cancel down the road
Expecting an increase in home value due to appreciation or home improvements
Americana Mortgage Group
1615 Northern Boulevard, Suite 404
Manhasset, NY 11030
Phone (516) 627-0200
Fax (516) 627-0229