The Jersey Shore by Karl Hess: September 2018

What the Heck is PMI and What's the Cost?

What is Private Mortgage Insurance (PMI) and What’s The Cost of NOT Paying PMI?

Private mortgage insurance, also called PMI, is a type of mortgage insurance you might be required to pay for if you have a conventional loan. Like other kinds of mortgage insurance, PMI protects the lender not you if you stop making payments on your loan.

Saving for a down payment is often the biggest hurdle for a first-time home-buyer as median incomes, rents, and home prices all vary depending on where you live.

Search for Homes in Ocean County

There is a common misconception among homebuyers that a 20% down payment is required, and it is this limiting belief that often adds months, and sometimes even years, to the home-buying process.

So, if you can purchase a home with less than a 20% down payment… why aren’t more people doing just that?

One Possible Answer: Private Mortgage Insurance (PMI)

Freddie Mac defines PMI as:

“An insurance policy that protects the lender if you are unable to pay your mortgage. It’s a monthly fee, rolled into your mortgage payment, that is required for all conforming, conventional loans that have down payments less than 20%.

Once you’ve built equity of 20% in your home, you can cancel your PMI and remove that expense from your mortgage payment.”

As the borrower, you pay the monthly premiums for the insurance policy, and the lender is the beneficiary. The monthly cost of your PMI depends on the home’s value, the amount of your down payment, and your credit score.

Below is a table showing the difference in monthly mortgage payment for a $250,000 home with a 3% down payment and PMI vs. a 20% down payment without PMI:

Bottom Line

If you have questions about whether you should buy now or wait until you’ve saved a larger down payment, let’s get together to discuss our market’s conditions and help you make the best decision for you and your family.

Karl Hess & Keller Williams Shore Properties provides expert real estate services to residential buyers and sellers in Ocean County. Contact us today for more information on Ocean County Real Estate and for professional assistance navigating this complex home market.

As always, thank you for your time and feel free to get in touch if you have any questions. Karl Hess, Keller Williams Shore Properties - #1 Real Estate Office in Ocean County

 

 609-553-7926

Find Your Dream Home on The Jersey Shore in Ocean County!

www.TheJerseyShoreHomeFinder.com

 

 Licensed in New Jersey.  Keller Williams Shore Properties 

1400 Hooper Ave. Toms River NJ 08753 Phone: 732-797-9001

 

 

 

Comment balloon 1 commentKarl Hess • September 27 2018 02:49PM
What the Heck is PMI and What's the Cost?
share
What is Private Mortgage Insurance (PMI) and What’s The Cost of NOT Paying PMI? Private mortgage insurance, also called PMI, is a type of mortgage insurance you might be required to pay for if you have a conventional loan. Like other kinds of… more
Is the Barnegat Housing Market Returning to Normal?
share
The Barnegat housing market has been anything but normal for the last eleven years. In a normal real estate market, home prices appreciate 3. 7% annually. Below, however, are the price swings since 2007 according to the latest Home Price… more
Reports Show It’s A Great Time to Sell Your Home!
share
We all realize that the best time to sell anything is when the demand for that item is high and the supply of that item is limited. The last two major reports issued by the National Association of Realtors (NAR) revealed information that suggests… more
Rent or Buy in Barnegat: Either Way You're Paying A Mortgage
share
There are some people who have not purchased homes in Barnegat because they are uncomfortable taking on the obligation of a mortgage. Everyone should realize, however, that unless you are living with your parents rent-free, you are paying a… more