Avoid PMI (Private Mortgage Insurance) to Save Money

When you purchase a home, lenders will require that your also purchase Private Mortgage Insurance (sometimes called Personal Mortgage Insurance), or PMI, to protect them from losses if you default or are unable to repay the loan. PMI is a monthly payment that can range from .4% – 1.2% of the loan amount, and all FHA loans require monthly PMI.

Four Ways to Avoid PMI

  1. Put down 20%: One way to avoid PMI is to put down at least 20% on your home. Any loan with 20% down will not have a personal mortgage insurance (PMI) requirement.
  2. SPLIT LOAN or PIGGYBACK LOAN: Those with good-to-excellent credit can avoid PMI by obtaining a split loan from DNJ Gateway Mortgage. Our split loan consists of an 80% first loan and a 9% Home Equity Line of Credit (HELOC). The HELOC is “piggybacked” on to the first loan so that in total you are borrowing 89% of the value/price of the home. By having the first loan at 80%, you can avoid PMI.
  3. Obtain a USDA Loan to Avoid PMI: A USDA Guaranteed Loan is a rural, government-insured, 100% financed program that requires no down payment nor monthly personal mortgage insurance. This is a 30-year, fixed rate mortgage, and eligibility depends on income, location, and price of the home. If you’ve found a more rurally-located property in Maryland, Virginia, North Carolina, South Carolina, Georgia or Florida you love and want to know if it is USDA eligible, ask a DNJ Gateway Mortgage representative now!
  4. Lender Or Borrower-Paid PMI: DNJ Gateway Mortgage will help you avoid PMI by utilizing this specialized, often-unused strategy for those with excellent credit scores (over 739). By raising the interest rate slightly we will pay the Mortgage Insurance Policy in one lump sum. In this way there will be no monthly personal mortgage insurance payment on your loan, and you will avoid PMI. This requires careful consideration and is not always the best choice for all borrowers, but it should be considered.

For more information on how we can help you avoid PMI for your home purchase in Maryland, Virginia, North Carolina, South Carolina, Georgia or Florida, contact our home offices or call us toll free today at 877-9-NO-COST (877-966-2678)!

DNJ Gateway Mortgage proudly serves clients in Raleigh, Durham, Chapel Hill, Cary, Apex, Greenville, Fayetteville, Fort Bragg, Greensboro, Winston Salem, High Point, Wilmington, and Charlotte, NC, and surrounding areas. We also offer mortgages in South Carolina, Virginia, Maryland, Georgia and Florida.