Private Mortgage Insurance (PMI) and low money down

Are you short the 20% down payment?

FHA may be popular (see my FHA article) but it is not the only answer to falling short of the 20% down. Private Mortgage Insurance is back and very competitive. It is a hands down winner - especially if you want to buy a condo - since it is near to impossible to get the FHA to approve most condominium associations.

These private companies like high credit scores and cap the sacred ‘debt to income ratio” that FHA is more relaxed on. If you earn a good living and have great credit, it certainly pays off here. For occasionally half the price of FHA insurance, your 5, 10 and 15 percent down payments can be insured by these companies with a lot of money saved. The interest rate may be slightly higher from the lender to compensate for the increased risk but you are still ahead of the game by going this route. No upfront payment. No appraisers giving you a hard time over items you were going to fix anyway. There are none of the worries of being locked into FHA insurance if values start to increase.

So remember, great credit + great income + lower down payment = private mortgage insurance.

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