Many buyers have heard the popular idea that they need a 20% down payment in order to buy a home. If your not financially prepared to put 20% down, you’ve probably heard of the programs that allow you to pull together a smaller down payment (or even no down payment!) and still end up as a homeowner. This is when Private Mortgage Insurance (PMI), comes in to play.
What it is: Mortgage companies require PMI to mitigate their risk when accepting less than 20% down.
How to cancel it: When you have at least 20% equity in Your home, you can work with your mortgage professional to cancel your PMI, reducing monthly expenses.
It may be tax deductible: PMI payments could be tax deductible (which could save you hundreds of dollars a year. Consult a tax professional.
How Much Is It: PMI typically costs between 0.5% to 1% of the entire loan amount on an annual basis.
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