Depending on the loan you choose, you may discover that you will need PMI, or Private Mortgage Insurance, to secure your mortgage. PMI is a type of insurance policy that a borrower may be required to buy as a condition of a conventional mortgage loan.
If your down payment for a home is less than 20%, many lenders require that you purchase PMI. This will protect the lender if you are unable to pay your mortgage. In other words, PMI guarantees your lender will be paid if you default on the loan. The benefit to you is that PMI allows one to purchase a home without putting down 20%.
PMI costs can range anywhere from 0.25% to 2% of your loan balance per year, depending on the size mortgage, down payment, loan term, and credit score. It is important to know that borrowers can request these PMI monthly payments be removed once the loan-to-value ratio drops to or below 80%.
Are you interested in purchasing a home in Fort Lauderdale or the surrounding South Florida area? Call Fairway Fort Lauderdale today! We would love to help!
