Do you hate the idea of paying mortgage insurance?  You are not alone, it’s prevented many people from buying a home because they cannot afford the 20% down payment.  What many people do not know is how to avoid mortgage insurance with LESS than a 20% down payment.  Let’s start with the basics:

What is Mortgage Insurance?

Mortgage insurance is a monthly insurance the homeowner pays to protect the lender against the risk of foreclosure.   It’s because of this insurance that lenders are willing to loan money at lower down payments ranging from None -20%.

How to Avoid Mortgage Insurance on a conventional loan  (with less than 20% down)

There are ways to avoid mortgage insurance with less than 20% down, you can actually avoid this cost with as little as 3% down (and sometimes with nothing down). It’s something called Lender Paid Mortgage Insurance (LPMI) and this is how it works:

 

Often times the monthly payment is less when you choose LPMI but over 30 year loan you will end up paying more in interest. It’s important to consult your loan officer about which option is best for you pending your financial and long term goals.

 

Thank you for reading and I hope to hear from you.

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Justin Scott

NMLS 8758581

Executive Mortgage