Saving for that 20% down payment can be a pressure to the family finances, and a hurdle for first-time homebuyer commonly overwhelmed with rents and home prices, which pushes them to adding more months and even years of waiting to finally start actively looking.
But what if you can have your dream home with less than the 20% down payment?
A private mortgage insurance is a policy that the guarantees a lender with a monthly fee that automatically fills for your mortgage payment, which is required for all conforming, conventional loans with 20% down payment. This insurance is also easily cancelled and removed on your mortgage payment, once you’ve built sufficient equity for the 20% of your home.
The monthly premium for the policy, you pay to the lender, is a monthly cost dependent to your home’s value, the amount of your down payment, and your present credit score.
For a home buyer, it easily spotted that a 20% down payment can be a huge amount, that requires financial sacrifices to save, and time that may take from five to ten years. Therefore, it only makes sense to consider a cheaper alternative of 3% down payment with PMI; that can be more realistic, and easily achieved for lesser time and economical pressure.
With time of the essence in the market, five to ten years can mean added value on the hiking home prices, given that homeowners are consistently growing home equity.
If you are interested knowing more about PMI and other payment options, or you’re still weighing whether to buy a home or save for a larger down payment, call us at (704) 237-0313, or (704) 617-0847.We’d love to give you a professional advice for your real estate needs.
Source: Keeping Current Matters