Avoid Private Mortgage Insurance (PMI)

[Admin]

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.

[master01]

PMI has added an additional variable to its Risk Index model, which estimates the sensitivity of changes in affordability on the probability of house-price declines. This new variable considers a local affordability index (AI) and incorporates the impact of changes in affordability on the likelihood of extended price declines.

"The former PMI Risk Index performed well and proved to be a reliable tool in the assessment of geographic house-price risk. Our Risk Index has been valuable in assessing and managing risk in our own mortgage insurance portfolio. With the new affordability co-efficient in our model, we have enhanced the ability of our Risk Index to forecast the probability of future home-price declines," said L. Stephen Smith, President and Chief Executive Officer, PMI Mortgage Insurance Co.

[mamun]

A debt instrument, secured by the collateral of specified real estate property, that the borrower is obliged to pay back with a predetermined set of payments. Mortgages are used by individuals and businesses wishing to make large value purchases of real estate without paying the entire value of the purchase up front.

thanks.