Are You Hip to PMI? VLOG

PMI

PMI stands for Private Mortgage Insurance and it is basically an insurance policy that protects your mortgage lender, in case you default on a mortgage and the home goes into forclosure. But you my not have to have it. Hi, I’m Kelly Allen at Keller Williams Realty. Yep, that’s right – you buy your lender an insurance policy UNLESS you are able to put 20% of the sale price down on your home. Banks have figured out that they can recover about 80% of the value of a home if it goes into forclosure, so they invented PMI to cover the rest. So how is PMI calculated? It depends on your lender and how much down payment you’re able to pay. PMI can range from .55% to 2.5% of the total amount of your loan. It can be paid all at once as part of your closing costs or monthly but if paid monthly can encur interest on top! But the good news is you can cancel Private Mortgage Insurance as soon as you’ve built up 20% equity in your home. Hey, there are a lot of great loan programs out there that require a low down payment and they can absolutely be your best bet for getting into a home, so I don’t want to scare you but I do want to educate you so you’re never leaking money unnecessarily.

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