Depending on the loan you choose, you may discover that you will need PMI, or Private Mortgage Insurance, to secure your mortgage. If your down payment for a home is less than 20%, many lenders require that you purchase PMI. This will protect the lender if you are unable to pay your mortgage. In other words, PMI guarantees your lender will be paid if you default on the loan. The benefit to you is that PMI allows one to purchase a home without putting down 20%.
There are several ways to pay for PMI. The most common method is a monthly premium that is added to your mortgage payment. The premium is shown on your Loan Estimate and Closing Disclosure on page 1, in the Projected Payments section.
If you aren’t able put down 20%, Dream Home Lending can offer you a variety of options that may work. Let’s talk through all your opportunities before you decide on the type of loan that is right for you. Call us today!
