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PMI: To have or not to have | Mortgage Companies Baton Rouge

Mortgage Companies Baton Rouge | PMI or No PMI | Mortgage Companies Baton Rouge

A favorite question that everyone likes to know is how do I prevent PMI?  The simple answer is putting 20% down on the purchase of your home. The down payment guarantees you that you will not have to worry about the hassles of PMI.  If you don’t put 20% down on your home, no matter if you pay PMI monthly or choose a higher rate, you are essentially paying for PMI.  I know you are probably wondering about all the stories of no PMI even with 3% or 5% down right?  Some Mortgage Companies Baton Rouge will tell you that they can eliminate PMI all together, but this is not always entirely accurate.  You still have PMI, but you are paying for it up front that way you don’t have to have it on your monthly note.  I’ve done the calculations, and this makes sense to do if you plan to stay in your home for at least three years.  That is usually the break even point of buying out the PMI.  With this being said, most homeowners will stay in their home for at least 3 to 5 years before they move, upgrade, or refinance for other different reasons.  I usually recommend buying out the PMI at the 5% down mark with a credit score of 740 or higher. It usually doesn’t make sense if your score is lower than this.  The cost of buying it out is extremely high, and if you are not getting enough closing cost paid by the seller, you may have to bring way to much money to the table. I know this can be overwhelming for any new borrower or an experienced homeowner, but I love to educate borrowers on the different options available so feel free to call Reliant Mortgage at 225-412-7773 and ask for Will Tullos I will do my best to keep your mind at ease.


Will Tullos

Branch Manager

Reliant Mortgage

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