100% Mortgage Financing – A Way to Avoid Private Mortgage Insurance

100% Mortgage Financing – A Way to Avoid Private Mortgage Insurance

Ideally, traditional mortgage lenders want new homebuyers to have a 20%

down payment when purchasing a new home. consequently, if purchasing a $200,000

home, you should be prepared to have $40,000 as a down payment.

Unfortunately, many people do not have this kind of money lying around.

For this matter, private mortgage insurance (PMI) was produced as a way

for mortgage companies to recoup their money if a homeowner defaults on

the loan. There are various loans obtainable to assist people with down

payments. In some instances, homeowners can acquire 100% financing, and

avoid PMI

What is Private Mortgage Insurance?

Because Americans are earning less money, and home prices are steadily

increasing, the majority of the population is unable to save the

recommended down payment of 20%. In order to make owning a home possible,

mortgage companies produced a particular mortgage insurance, (PMI), for

people with less than 20% to put down on a home. This insurance protects

the lender if you default on the mortgage.

How to Avoid Paying Private Mortgage Insurance

On average, PMI may increase your mortgage payment by $100 – sometimes

less, sometimes more. However, there are ways to avoid paying this

additional insurance. The obvious involves having at the minimum 20% as a down

payment. If this is not an option, homeowner may agree to a higher

interest rate. Another tactic entails getting approved for 100% financing.

How Does 100% Mortgage Financing Work?

100% mortgage financing makes it possible to buy a home with no money

down. Also referred to as a piggyback loan or 80/20 mortgage loan, 100%

mortgage financing involves obtaining a first mortgage for 80% of the

home cost, and a second mortgage, or home equity loan, for 20% of the

home cost. Together, the first and second mortgage allows a home buy

with no money down, and no private mortgage insurance.

Visit www.abcloanguide.com to find a list of reputable online lenders for 100% mortgage

financing. To qualify for 100% mortgage financing, you must have good credit. In

addition, homebuyers must be in a financial position to pay closing

costs. Of course, there are ways to avoid this out-of-pocket expense. This

option involves 103% mortgage financing, which is intended to assist

homebuyers with down payments and closing fees.

leave your comment