The first thing you should know is that PMI stands for Private Mortgage Insurance.  It protects your lender in case you default on your loan.  You’re required to have PMI until you pay off 20% of your home loan.  Now the thing we’ve all heard at some point is to “avoid PMI at all costs” or “you should save until you have a 20% down payment.”  But we want to give you a few things to think about that aren’t just STAY AWAY.  PMI isn’t necessarily your enemy, and here’s what you need to know about it.

What you make not know that’s GOOD about PMI…

  • It will allow you to buy with a lower down payment. While a larger down payment allows you to avoid PMI, the existence of PMI can allow you to purchase a house if the perfect home comes on the market before you’ve saved 60 grand.
  • PMI also allows you to keep money in the bank, which we always recommend! As a new homeowner, you’re bound to have a repair or two that you didn’t expect. It’s always wise to have some money set aside for when repairs come up.
  • Whatever you decide, PMI doesn’t last forever! Once you pay off 20% of your home, you can remove your PMI payments. So make a strategy! It’s not a bad option.


Now, the reasons PMI scares people off…

  • It is an extra premium you pay on top of your mortgage, and you don’t get it back. So you should consider how long you plan on paying for PMI and decide if it’s worth it.
  • PMI rates vary! How high the rate is will definitely play a part in your decision.
  • As much as “insurance” sounds nice, what you should know is that it protects the lender, not you. It’s logical on their part, but you should consider that it doesn’t bring a lot of benefit to you.

So what will you decide?  Take a look at your finances and talk to your lender.  Hopefully you know a few more things about PMI and what questions to ask!  You can discuss what kind of a loan you could be approved for and what your budget is – and whether PMI is a good choice for you.  If you don’t have a lender, give us a call!  We’re faith-based and family oriented, and we’d love to help.




The Christian Mortgage Mom