Private Mortgage Insurance Helps You Get The Loan
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Private Mortgage Insurance, also known as PMI, is a supplemental insurance policy you may be required to obtain in order to get a mortgage loan. PMI is provided by private (non-government) companies and is usually required when your loan to value ratio (the amount of your mortgage loan divided by the value of your home) is greater than 80 percent.
PMI isn't a bad thing, it allows you to make a lower down payment and still qualify for a mortgage loan. In fact, without PMI many of us would not be able to purchase our first home.
How is PMI calculated?
Your PMI premium is fixed based on plan type (loan-to-value ratio, loan type, loan term, etc.) and is not related to your particular credit history or other individual characteristics. PMI typically amounts to about one-half of one percent of your mortgage amount annually, according to the Mortgage Bankers Associate, and the premium payment is usually rolled into your monthly mortgage payment. On a $200,000 mortgage, you may be playing $1,000 per year for PMI.
At Croghan Colonial Bank, we answer questions about private mortgage insurance every day. Give us a call at 888-276-4426, or complete the form below.