Colorado Springs Vintage Homes Blog

Why do I have to pay mortgage insurance?

Colorado Springs Vintage Homes is happy to feature a great article by

Harry Venik with Adams Mortgage, LLC in Colorado Springs

Related Articles:

• Pre-Qualification or Pre-Approval, which do you need to buy a home?
• Will VantageScore Bring Consistency?
• Colorado Springs Mortgages — tips for consumers on points
• Marriage and Mortgages FAQ’s
• How do I get a down payment for Homes in Colorado Springs?

Why Pay Private Mortgage Insurance (PMI)?

Private Mortgage Insurance (PMI) is required by most lenders when a borrower puts less than 20% down on a purchase loan.   Paid for by the borrower, PMI not only protects the lender from foreclosure, it also enables many buyers to qualify for loans and purchase real estate when they couldn’t have otherwise.   On January 1st, 2007, legislation went into effect making PMI tax deductible for new borrowers whose personal adjusted gross income is $100,000 or less.  This has created additional opportunities for many buyers to finance a more expensive home or, in some cases, to obtain a lower monthly payment, while reducing annual income taxes.

What is the advantages of PMI?

An alternative financing option that borrowers may also consider involves taking out two home loans concurrently. The second loan, commonly referred to as a “piggyback loan”, can take the form of a traditional home loan or a Home Equity Line of Credit (HELOC).   It supplements the borrower’s funds to help them achieve a 20% down payment, eliminating the need for PMI.   However, in most cases PMI can be cancelled once the accumulated equity has reached 20% of the home’s value, while a second home loan will have to be paid back in full regardless. Factor in the new PMI tax benefit, and a borrower’s monthly payment may actually be lower with PMI versus a piggyback loan scenario.

Choosing PMI is not a one-size-fits-all decision. It is my job to weigh my borrowers’ long-term goals and to provide comprehensive solutions that clearly explain all of the pros and cons of each mortgage option available. It’s a job I take very seriously.

Submitted by Harry Venik – Have a question?  Contact Harry at 719-338-3897 or 719-955-3674

hvenik@adbancmortgage.com

For more information on mortgage loans and buying Real Estate in Colorado Springs,

contact Kathy at 719-287-1049

KTorline@msn.com 

Tags: home buyer tips, mortgage insurance, PMI, Private Mortgage Insurance

This entry was posted on Thursday, June 18th, 2009 at 3:26 am and is filed under For Buyers, Mortgage and Finance. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

1. Why do I have to pay mortgage insurance? | Colorado Springs ... | Kabonfootprint blog said at June 20th, 2009 at 10:44 am

   [...] Excerpted from:Why do I have to pay mortgage insurance? | Colorado Springs … [...]

2. What are Mortgage Rates Like in Colorado? are They Different? | afcmortgagefl.com said at July 9th, 2009 at 7:43 am

   [...] Why do I have to pay mortgage insurance? | Colorado Springs … [...]

3. Getting a Colorado Mortgage Rate Quote | afcmortgagefl.com said at August 9th, 2009 at 2:25 am

   [...] Why do I have to pay mortgage insurance? | Colorado Springs … [...]

Leave a Reply