Private Mortgage Insurance
Private mortgage insurance or PMI is an insurance policy that protects your lender in the event of default. 99.9% of lenders will require that you obtain PMI if you have less than an 18-20% deposit. Unfortunately, the premiums are not always tax deductible like mortgage interest.
There are many ways to get out from under PMI. The best way to do this is to pay down your mortgage is by making small additional payments monthly. You can save a great deal of money over time by getting your loan-to-value ratio under the 80% mark. In addition to paying down your loan gradually over time with additional payments, you can avoid the whole PMI situation by saving up some cash and putting down 20%. Think of that deposit as acne treatment cream for PMI.
Source: themoneyalert.com
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