What is PMI?

PMI, is Private Mortgage InsuranceYou need it because a bank takes a higher risk with less money down. Most lenders require 20% down to avoid PMI, and the rate or cost is going to be associated with the credit risk of the borrower assessed by the bank. You need it to ensure that the bank won't lose money when it lends you money. MGIC and Radian are the two companies we use the most if you want to shop it, however your lender should pick the one that is the best without you needing to do so. It's not like auto or home owners insurance as there just aren't that many options. FHA can be thought of as the governments mortgage insurance company. They go up to 96.5% Loan to Value vs 90% with the other lenders. These guidelines are always changing so it's best to talk to your loan officer about the latest changes.

PMI stands for Private Mortgage Insurance. The easiest way to describe it is an insurance policy that you pay for, which protects the lender in the event of a default ( the lender can sell the property at a discount for a quick sale, then get re-imbursed by the insurance company for the difference) PMI is required on conventional loans with a loan to value above 80%. PMI is typically ordered by the lender that is originating your loan, so you don't have to worry about shopping for a policy. Unfortunately PMI is a necessary evil for high LTV loans in the current market. I would be happy to discuss the issue in detail and learn about your scenario - give me a call at 262-264-5462 - ask for Casey

PMI is the least on FHA loans. After that depending on what you put down and your credit scores, the PMI rates differ.You can go to MGIC and Radian to get an idea. But, 10% down is needed for any AZ property with PMI.