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Why Would You Put 20% Down? Avoid PMI with Less!

Why Would You Put 20% Down?  Avoid PMI with Less!

 

In today’s world, PMI is considered a bad word in mortgage financing and home buying, and for good reason.  After all, PMI doesn’t protect a borrower, it protects a lender, and in markets like we’ve recently seen, most of which are appreciating at a high rate, loans don’t seem to have high enough risk to warrant the additional cost of PMI.

To avoid PMI, the traditional path is to come up with 20% down payment.  This is a solution, but as homes get more expensive, that 20% is becoming a larger and larger dollar amount.  With the median US home price coming in at the mid-$300s price point, each 5% increment is nearly $20,000.

The good news?  There’s a solution that works extremely well, and for buyers with good credit, makes putting 20% down seem silly.  For those who can benefit, there’s an opportunity to keep money in the bank, get the dream home, and avoid that nagging monthly PMI!  In this video I break down exactly how it works so that buyers can take advantage, and agents can guide their buyer toward the best possible loan options.  In fact, when using this strategy, 20% down seems downright silly.

Here’s how it works:

 

A few things are important to keep in mind – this strategy works best with 15% down (but can also be applied to keep even more money in the bank with 10% down).  It also only works well when the buyer/borrower has a good credit rating – this is due to the cost of PMI varying based on credit score.  Situations vary, and there’s a different solution for every buyer, so it’s important to weigh all options and make the right decision for each borrower’s unique solution, but, it’s important that when it comes to PMI, we stop talking in terms of “20% down or bust!”.
A lot of options exist, and sometimes the right loan option involves a little of creativity and know how to set customers up for success!

John Meussner | MLO NMLS 138061

Licensed by The Department of Financial Protection and Innovation under the California Residential Mortgage Lending Act. NMLS# 1141
MasonMac Corporate

Mason-McDuffie Mortgage

Office: (949) 247-7530

12647 Alcosta Blvd
Suite 300
San Ramon, CA 94583


Licensing:

Not  a  commitment  to  lend. Rates  and  terms  subject  to  change  without  notice. Licensed by The Department of Financial Protection and Innovation  under  the  California  Residential  Mortgage Act  No. 4130968; AL  #22653; AR  #32700; Colorado regulated by the Division of Real Estate; DE #019623; FL #MLD819; Georgia Residential Mortgage Licensee #20924; ID #MBL-5861; Kansas Licensed Mortgage Company #MC.0025601; KY: #MC701698; MD: #16927; Mississippi Licensed Mortgage Company Licensed by the Mississippi Department of Banking and Consumer Finance; Licensed by the NJ Department of Banking and Insurance; NC: L-152867; NV: #3681; OK: #ML012358; Licensed by the Oregon Division of Financial Regulation #ML-3808; PA: #37008; TN: #112513; Licensed by the Virginia State Corporation Commission #MC-5579, WV: #ML-31523/MB31759. NMLS #1141. www.nmlsconsumeraccess.org