Private Mortgage Insurance (PMI) gets a bad rap among homebuyers. Many of us have parents (or grandparents) who told us that we needed to save 20% to buy a home, or else we'd have to pay the dreaded PMI. However, there are reasons to appreciate PMI.
Purchasing with 20% is great, but being able to buy sooner will allow you to take advantage of appreciation in real estate, and eliminate paying rent to someone else (which is the real villain). And the cost of PMI may be less than you think. Check out this recent, real-world example:
Our client had a purchase price in mind and savings put aside. However, she found a house that was above her target price. In order to put 20% down on this dream home, she'd need $8800 more than she had allocated for down payment. In her case, the monthly mortgage insurance payment was $36. For her, this was a small price to pay to avoid missing out on her perfect home.
Much like mortgage rates, PMI premiums are based on a variety of factors, so every case can be different, but this example illustrates how PMI can help you realize the dream of homeownership sooner. If you'd like to explore your individual situation, reach out anytime!