hardik Soni
Joined: 16 Jun 2010
Posts: 42
Location: India
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| Posted: Thu Jul 15, 2010 11:41 am Post subject: Personal Mortgage Insurance.. |
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Private Mortgage Insurance is extra insurance that lenders require from most home-buyers who obtain loans that are more than 80 percent of their new home's value. In other words, buyers with less than 20 percent down payment are normally required to pay PMI.
Keep track of your payments on the principal of the mortgage. When you reach 80% equity, notify the lender that it is time to discontinue the PMI premiums. To make it easier, lenders are now required to tell the buyer at closing how many years and months it will take for them to pay 20% of the principal to cancel PMI. However, U.S. law does allow lenders to continue requiring PMI all the way down to 50% equity for so-called high-risk borrowers. Traditionally, loans considered high risk include reduced documentation loans, in which customers provide less proof of income and other information during the approval process. Loans for people with poor credit histories and higher debt-to-income ratios also fall into this category.
Benefits of PMI : -
PMI plays an important role in the mortgage industry by protecting a lender against loss if a borrower defaults on a loan and by enabling borrowers with less cash to have greater access to homeownership. With this type of insurance, 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 large down payment. Can you suggest more advantages for PMI ? |
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