Click here if you haven’t read part 2 on how to avoid PMI!

The dreaded PMI(Private Mortgage Insurance) is required by lenders to borrowers who do not have at least 20% of the purchase price as a down payment. Depending on your loan balance, this PMI payment can range from an extra $50 to $300 in addition to your mortgage payment. Yikes!

Have you ever heard of “Lender Paid Mortgage Insurance?”

Lender Paid Mortgage Insurance (LPMI) is a mortgage program that has been around for awhile, but for some reason many people are not aware of it.  The lender pays for the PMI with this mortgage program, not you.  These is a small adjustment to the interest rate, but it can mean a world of difference to your payment and making the mortgage payment more affordable.

I’ve laid out two options, so you can compare the difference.

1. Loan Example withPMI

- $200,000 purchase price

- 5% down payment ($10,000)

- 30 year fixed rate of 5.875%

- Payment = $1247.42($1123.92 of principal & interest + $123.50 of PMI)

2. Loan Example withoutPMI

- $200,000 purchase price

- 5% down payment ($10,000)

- 30 year fixed rate of 6.375%

- Payment = $1185.35

Example 2 is $62.07 less every month. That is a savings of $744.84 every year!

So, if you are purchasing a home or refinancing your existing mortgage and you don’t have that magical 20%, just tell me…”Josh, I want to know how much I can save with LPMI.”