Athen Apaquette

I want to put 10% down on a new home but don’t want to pay PMI. Is there a way to do that?

Yes indeed there is! There are 2 ways and half way.

The first way is to get 2 loans = 1 loan that is 8% of the price of the home and the other 10%; because the first mortgage is at or under 80% of the value of the home, there is no PMI required. The 2nd mortgage, called secondary financing or a piggy back loan, has a slightly higher rate but will for most people be a tax write off where PMI is not.

The other way to avoid PMI is to have the lender do what’s called LPMI or lender paid PMI, which is where they give you a higher interest rate and pay the PMI out of their funds. That way you get the interest tax write off and no extra separate payment for PMI.

The last way to avoid a PMI payment is to pay a 1 time premium for the PMI, also called SPMI (single premium mortgage insurance). The PMI company will charge a flat fee as a percentage of the loan (between .9% and 4%, depending on down payment type of property and credit score) and NO monthly fee, which is better for your budget. And in most cases we can finance that into the loan amount.

So if you know someone who hates PMI but wants to put a small down payment, we have solutions!