Avoid Private Mortgage Insurance (PMI)
If you're a homeowner, you've probably heard of private mortgage insurance (PMI). It's an insurance required on any mortgage that has a loan-to-value (LTV) greater than 80%.
Having PMI on your mortgage can get costly, but there are a couple of ways in which PMI can be avoided:
• Get a second mortgage or piggyback loan to cover any loan amounts above 80% LTV. For example, if a property costs $100,000 and you only have $10,000 for the down payment, you can get a piggyback loan to cover the other $10,000. This method will keep your first mortgage at 80% which prevents the requirement for PMI.
• Get a subprime loan. Subprime loans do not require PMI. I know it sounds bad, but when your credit is marginal or borderline, it is sometimes more beneficial to go with a subprime loan.
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