Many consumers would like to avoid mortgage insurance, but it can be difficult. Saving 20% or more for a down payment is a significant task, and the nation’s savings rate is a mere 5%. In addition, mortgage insurance costs more than a homeowner should pay for the house, so many people are forced to take it.
If you are considering mortgage insurance, here are some ways to avoid it. You can also consider a USDA or VA mortgage. These mortgages are government-backed, but they still do not require mortgage insurance. Moreover, you can often find low-down-payment requirements.
Avoid Mortgage Insurance
One of the best ways to avoid mortgage insurance is to put down at least 20%. However, this approach has its drawbacks. First, not having a down payment can increase your loan balance, which will mean higher mortgage payments. Second, you may have to pay private mortgage insurance, or PMI, which will increase your monthly mortgage payment.
In most cases, you can avoid PMI by making a 20% down payment. Also, if you have a high credit score, you can avoid PMI by maintaining a low balance on your credit cards First Time Buyer Swindon. And, of course, avoiding the mortgage insurance fee is the best way to keep your credit score high.
Third, avoiding mortgage insurance is possible by refinancing your loan. By refinancing, you can get a lower interest rate and reduce your monthly payments. But it is still a good idea to pay off the mortgage insurance in full. This is especially true if your equity is at least 78%. You should consider doing so if you are trying to save money on your monthly mortgage payment. And remember, mortgage insurance isn’t the end of the world, but it is a necessary evil.