A buyer with less than 20% down HAS to pay PMI.
In fact, there are 4 ways to pay PMI and 2 of them are not monthly.
On a $400,000 loan on a condo with 5% down, you might have to pay $300 per month for PMI.
However, to avoid that monthly fee, you can also pay a one-time fee called Single Premium PMI.
You can pay through the rate which is called Lender-Paid or LPMI (about .5% higher for a low down) with no monthly payments.
You can have a split premium, or you can pay the regular monthly way.
When it’s in the loan as a one-time fee, or in the rate, you have now turned something that was a waste of money into a tax write-off.
So when should you pay monthly? When you think the property will go up in value, and you can get rid of it quickly. That way you have the lowest rate and lowest loan amount. There is no good or bad, just what’s right for you.
To find out whether your client qualifies for “no PMI”, call me for a free analysis at 310-218-6855