Jan 19 2024 16 mins
What Affects Your PMI Rate
Lenders prefer that you put at least 20% down, but if you push hard enough, many will allow you to put less than 20% down if you're willing to purchase insurance to protect them in case you default. This insurance is called Private Mortgage Insurance.
The cost of this insurance depends on several factors. Some are primary factors and have a significant impact on the cost of the insurance policy. Other factors are secondary and affect the premium, but only to a smaller extent.
In this mini-class, James will go over the things that affect your private mortgage insurance rate if you decide to put less than 20% down when buying properties.
Check out the video from this class here:
What Affects Your PMI Rate - Video
In this class, James discusses:
- What is Private Mortgage Insurance (PMI) and why does it exist?
- Factors that affect your PMI rate
- Loan-To-Value of the property (often just the first lien)
- Coverage amount for the lender
- Your credit score
- Amortization term of the loan itself - shorter terms have lower PMI
- Fixed and variable payment amounts
- Time you’ve been paying the rate
- Lender (separate pricing sheet for Credit Unions)
- Hard minimums for PMI rates
- Cash-out refinance
- Second home
- Employee relocation loans
- Manufactured Homes
- Investment Property
- 3-4 units
- Lender-Paid Monthly Premium
- Declining Renewals
- Annual Premium
- Refundable Monthly Premium
- High Debt-To-Income Ratio (> 45% DTI)
- More than 1 borrower on the loan (reduces PMI rate)
- Plus much more...
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