How to Avoid Private Mortgage Insurance?

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You are paying for private mortgage insurance if your monthly mortgage statement has a line marked "PMI." However, what is its true purpose?

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Who bears the cost and who is spared? Above all, how can you prevent it from happening again? Here we will teach you how to save a minimum of $50 to $250 a month.

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The FHA mortgage was created especially for those who were first-time homebuyers with low incomes and bad credit. 

Avoid FHA Loans

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Contrary to "conventional" belief, borrowers with credit scores as low as 580 are eligible for as little as 3.5% down payment.

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If lenders ask for PMI when you contribute less than 20% of the buying price, pay the necessary 20% down payment to avoid it.

Put Down 20%

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An 80/10/10 piggyback mortgage scheme is still available from some lenders, however it is less widespread than it formerly was.

Consider a Piggyback Mortgage

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It entails taking out two mortgages: a 10% down payment, an additional 10% from a second mortgage (also known as a HELOC), and 80% of the purchase price from the first mortgage. With the 80% mortgage, PMI is avoided.

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Some borrowers choose to pay off their mortgage loan as soon as possible to get it down to less than 80% LTV, even though they put down less than 20% and accept the PMI charges.

Pay Down Your Loan Balance Quickly

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According to the federal Homeowners Protection Act, the lender is required to automatically remove PMI whenever your loan total surpasses 78% of the original purchase price or appraised value.

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Consider the costs and monthly savings before refinancing a mortgage. 

Refinance the Mortgage

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 It rarely benefits the homeowner and, far too frequently, benefits the lender at the expense of the latter. 

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