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How to Avoid PMI in Alabama on Your Mortgage

How to Avoid PMI in Alabama on Your Mortgage

PMI, or Private Mortgage Insurance, is a way for mortgage companies to be protected in case of the borrower defaulting on their loan. It’s additional money that you have to pay every month on your mortgage. How can you avoid PMI in Alabama on your mortgage?


Borrowers will usually require PMI if the borrower is putting less than 20% down on a conventional mortgage, and you can then get rid of it after you build your equity up to 20%.


PMI is sort of a necessary evil for many mortgage programs. For homeowners that don’t have the ability to put down 20% on their home, which is a group growing every year, this is a path to home ownership and wealth building.


It is money that you pay each month that does not go towards paying off your home though, so that needs to be weighed.


Ways to Avoid PMI in Alabama


A couple of ways to keep from paying PMI:


Start with a 20% down payment on your home.


Making a larger down payment can both help you avoid having to pay PMI, but also lower your monthly payment. You can also likely get a lower interest rate, cut down on fees and build equity more quickly.


Get a VA Loan to Avoid PMI in Alabama


VA Loans, which are loans guaranteed by the Department of Veterans Affairs, are mortgages offered to current and veteran military service members and their spouses. While they will require a one-time funding fee, they are PMI-free.


Does Your State Offer any Financing Programs


Many states have mortgage and down payment assistance programs that help first-time homeowners that qualify. The programs can include low-down-payment options and keep PMI off of your loan, or offer lower rates on PMI.


USDA Loans


USDA Loans, eligible for many suburban and rural borrowers, do not have PMI baked in. However, they do have two fees that replace it. They require an upfront guarantee fee of 1 percent of the loan amount, along with an annual 0.35 percent fee.


The upfront fee is often rolled into the loan financing and is paid at closing, while the annual fee is part of your monthly payment and is paid throughout the whole loan.


Should You Avoid PMI in Alabama


Sure, if it’s possible, you should avoid paying PMI in Alabama. However, it’s not a reality for many borrowers, who want to buy a home and can’t afford a 20% down payment. PMI is not a bad thing, just necessary for many borrowers who don’t have another option, and it isn’t forever.

 

Call the best mortgage lender in Alabama, Mike Carey’s Alabama Loan Experts Team in Gulf Shores (901) 619-3665 or visit AlabamaLoanExperts.com to apply now. Alabama Loan Experts has the lowest rates on Conventional, FHA, Mortgage Refinances, Jumbo Loans, Debt Consolidation Loans, Rate and Term Refinances, Cash Out Refinances, and HARP Loans. We are also the exclusive home for Hero.Loan VA Mortgages and The Bank Statement Mortgage. We will come to you to close your loan. Nobody gets lower mortgage rates on better loans than Alabama Loan Experts.

Mike Carey

Mike Carey

As a mortgage professional with over twenty years experience, I understand the lending guidelines and keep up with the constant change in the industry. In my 20+ years of mortgage lending, I have helped thousands of buyers throughout the country. My specialties include all areas of lending from first time home buyers to seasoned buyers.

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