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Mortgage Broker - Private Mortgage Insurance - Avoid Paying PMI by Negotiating For a Higher Mortgage Rate If your mortgage company is requiring Private Mortgage Insurance with your loan there are ways around paying for the insurance. Private Mortgage Insurance does nothing to protect the homeowner including might add hundreds of dollars to your monthly mortgage payment. Here is 1 way to avoid paying for Private Mortgage Insurance. Mortgage lenders are usually required by Fannie Mae including Freddie Mac to have Private Mortgage Insurance on all mortgages with loan-to-value ratios greater than 80 percent; however, lenders that do not sell mortgages on the secondary market might provide loans without Private Mortgage Insurance. The catch is that these absolutely no Private Mortgage Insurance lenders typically price their loans .5% higher than the prevailing market rates. Will the higher mortgage rate save you money? It depends on your situation including how much more the PMI premium could add to your payment. There is another factor to consider at the time opting for a higher mortgage rate; you gain a tax advantage with the absolutely no Private Mortgage Insurance loan because PMI premiums are not tax deductible. On the other hand, you are able to terminate your Private Mortgage Insurance after your equity reaches a certain level including the lender may do it sooner if your payments have all been paid on time. The decision to pay a higher mortgage rate or take Private Mortgage Insurance is not clear cut for every homeowner, however, you may be able to save dollars with a higher mortgage rate including the option to refinance down the road. You might learn more regarding your mortgage options, including costly mistakes to avoid by registering for a free 6 part mortgage tutorial.
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