How to Avoid PMI: Private Mortgage Insurance

Private mortgage insurance, or PMI, is insurance written by a private company that protects the lender from losses if a borrower defaults or is unable to repay the loan. The PMI is a monthly payment that can range from .4% – 1.2% of the loan amount. All FHA loans require monthly PMI payments.

There are four ways to avoid PMI:

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    Make a 20% Down Payment

    Any loan with 20% down will not be required to have private mortgage insurance.
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    Split Loan or Piggyback Loan

    If you have good or excellent credit, then a split loan is a good solution to lower your mortgage payment by avoiding PMI. We offer a split loan with a 80% first loan and a 9% home equity line of credit (HELOC). The HELOC is piggybacked on to the first loan so that in total you are borrowing 89% of the value/price of the home. By having the first loan be 80%, no PMI is required. Some geographic and credit score limits apply.
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    USDA Loan

    A USDA Guaranteed Loan is a rural, government-insured, 100% financed program that requires no down payment. This loan does not have monthly PMI. This is a 30-year, fixed rate mortgage and eligibility depends on income, location and price of the home. Holly Springs and Fuquay-Varina are two Triangle-area locations that may qualify. If you’ve found a property you love and want to know if it is USDA eligible, ask a DNJ Gateway Mortgage representative now!
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    Lender-Paid PMI

    DNJ Gateway Bank Mortgage is a specialist in this creative solution to avoiding PMI. Note that you must have excellent credit scores (over 739) to take full advantage of this strategy. By raising the interest rate slightly, we will pay the mortgage insurance policy in one lump sum. In this way there will be no monthly PMI payment on your loan. Note that this strategy requires careful consideration and is not the best choice for everyone, but it is worth considering.
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Avoid PMI with Help From DNJ Gateway Bank Mortgage!

Would you like to learn more about your options for avoiding PMI? Contact DNJ today. We’ve earned the trust of homeowners in the Triangle, the Triad the Outer Banks, Western North Carolina, Virginia Beach, Rehoboth Beach, the Eastern Shore of Maryland, the Eastern Shore of Virginia, and more – Let us earn yours!

DNJ also offers mortgages in Tennessee, South Carolina, Georgia, Texas, and Florida. Call today!