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Mortgage Insurance

and why it doesn't suck

· mortgage insurance,MORTGAGE,debt,mortgage rates,first time homebuyer
Most people assume private mortgage insurance (PMI or MI) is a bad thing. Here are some examples of why PMI does not suck. LIGHTBULB!

Many mortgage loan programs today allow homebuyers to use less than a 20% down payment when buying a house. When you do this, you are often required to pay Private Mortgage Insurance (PMI). This increases your mortgage payment slightly. Here are three reasons why PMI is actually a huge benefit to you:

1 – PMI Allows You to Buy Now Instead of Waiting
For example, assume houses in your market are going up in value by 3% per year. If you buy a $200,000 house now, you save $6,000 vs. waiting a year. Plus, that $6,000 in house price appreciation becomes extra wealth that you’ve just created for yourself. PMI allows you to buy now and benefit from future house price increases.
2 – PMI Frees up Funds to Pay off Higher Interest Rate Debt
For example, if you have credit card debt at 9% and mortgage rates are 4.5%, you may be better off putting less than 20% down. Instead, you could use a portion of your down payment funds to pay off the credit card debt. PMI allows you to do this.
3 – PMI Frees up Funds to Invest at a Higher Rate
When you use funds for a large down payment, you are missing out on the opportunity to earn a rate of return on that cash. Is your rate of return on investments greater than the cost of a mortgage with PMI? If so, it may make sense for you to put less than 20% down, use a higher balance mortgage with PMI, and keep your funds invested.

Stephanie Donnell
Residential Mortgage Loan Originator
NMLS: 1031976
Capstar Lending, LLC
(512) 608-7303
6836 Austin Center Blvd #110,
Austin, Texas 78731
Corporate NMLS: 214411

Capstar Lending, LLC NMLS 214411 ( 6836 Austin Center Blvd #110; Austin TX 78731 512-459-2400. Capstar Lending, LLC is an Equal Housing Lender. This is not an offer to enter into an agreement. Information, rates and fees are subject to change without prior notice. Loan approval is subject to applicant's qualification for a loan program. All products are subject to credit and property approval. Capstar Lending, LLC is not affiliated with any government agency. Intended for Texas consumers only, Texas- SML Mortgage Banker Registration. Residential Mortgage Loan Originator.

PLEASE NOTE: This article is provided for illustrative purposes only. It is not an offer or commitment to lend you money, and it is not an advertisement for a specific mortgage or a specific interest rate. Contact me to run the numbers for your situation.

Source: CMPS Institute

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