100 Mortgage Financing A Way To Avoid Private Mortgage Insurance
Below is a MRR and PLR article in category Finance -> subcategory Mortgage.
100% Mortgage Financing: Avoiding Private Mortgage Insurance
Introduction
Purchasing a home often requires a hefty down payment, typically 20% of the home's price. For a $200,000 home, this means coming up with $40,000 upfront. However, not everyone has this kind of cash on hand. To address this, private mortgage insurance (PMI) was introduced. But there are ways to avoid PMI, such as 100% mortgage financing.Understanding Private Mortgage Insurance
As home prices rise and wages stagnate, saving a 20% down payment has become increasingly challenging. PMI was created to help people purchase homes with less money down. It protects lenders if the borrower defaults on the loan.Strategies to Avoid PMI
PMI can add around $100 to your monthly mortgage payment. To avoid this, you can either make a 20% down payment or look at other options. One alternative is agreeing to a higher interest rate. Another effective strategy is securing 100% mortgage financing.How 100% Mortgage Financing Works
100% mortgage financing allows you to buy a home with no down payment. Often known as an "80/20 mortgage loan" or "piggyback loan," this involves two separate loans: a first mortgage covering 80% of the purchase price and a second mortgage, or home equity loan, covering the remaining 20%. This approach eliminates the need for both a large down payment and PMI.By exploring 100% mortgage financing, homebuyers can achieve their dream of homeownership without the hefty upfront cost.
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