What is PMI?
This insurance policy is a gift to your lender
Federal Housing Administration (FHA) loans often confuse people because the FHA (Federal Housing Authority) does not make loans. Instead, it insures the loans made by lenders it has approved. This means if the borrower defaults, the FHA, which is a government program, will cover the losses.
PMI protect your lender? First, let it be said that PMI was designed strictly for your lender’s protection and not yours.
The PMI gives lenders incentive to seek out more business—in other words, to find more homebuyers like yourself, many of whom have never bought a home before and, like you, are able to put down the bare minimum 3 percent down payment. In a sense, we can all be grateful for the PMI, because without it, if you didn’t have 20 percent.
A few factors to consider before you jump on the PMI bandwagon: First, it’s not inevitable. Some lenders won’t ask you to pay a PMI, so you’ll want to do some comparison shopping, investigate your options
FHA Loans Down Payment Requirement is that of 3.5% of the Purchase Price (not including any Government or down payment Assistance Program)
Closing cost will include: Cost of your mortgage acquisition, County taxes and Estate Taxes, Title Insurance and cost to be able to prepare your purchase by a Title Company of your choice, cost of your documents prepare to purchase and the funds to establish your Escrow with your bank.
Your Payment will include:
- Principal + Interest
- Private Mortgage Insurance(PMI)
- Home Insurance
Your Home insurance and your taxes are not fixed, it may vary annually. For Condominiums and Townhouses your Home Owner Due are not included in your monthly payment.