Question:

How can I get cheap mortgage insurance?

Answer:

Cheap mortgage insurance is possible if you are making a larger down payment. It will vary among insurers and mortgage insurance plans but basically, if you put down 3%, your PMI may be over 0.85% of the annual loan, compared to only 0.5% if you put 15% down.

Private mortgage insurance is needed in the case the borrower defaults and the lender will be reimbursed for up to 20% of the loan amount depending on the case. A way to go cheap and avoid mortgage insurance is to get a second mortgage to cover for the difference, using an 80/10/10 plan in which you are contributing 10 percent towards the down payment, and a second lender is lending 10%. However, if you are doing an 80/15/5 and only 5 percent are going towards the down payment, you may get higher rates and fees.

Even if you are unable to get a cheap mortgage insurance, you can request PMI termination when you reach 20 percent equity, or the lender will terminate it anyways when you reach 22 percent of equity.

Mortgage rates hit their lowest since 1955. Ask the home loan experts we recommend Quicken Loans how to take advantage of them.
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