Today I’m covering important distinctions regarding private mortgage insurance between loan programs.
What exactly is private mortgage insurance (PMI)? Essentially, it’s a fee that’s assessed to the consumer when they don’t have 20% to put down on a home.
PMI differs from program to program. For example, with a conventional loan, your credit score is the primary driver of your PMI; the higher the credit score, the lower the PMI. Keep in mind that on a conventional loan, the PMI will eventually fall off of the loan.
For FHA and USDA loans, the PMI is static for everybody, regardless of credit score, and will be attached for the entire life of the loan. At some point, you’ll have accrued 20% equity and will need to refinance to get rid of that PMI.
Knowing the differences with PMI between loan programs is critical. If you don’t have 20% to put down and you want to know more about your options, or about how PMI will affect your payment, feel free to reach out to me by phone or email anytime. I’m always here to help.