Current Prime Rate Prime Rate History Home Equity Loans Avoid Mortgage Insurance  


If you put less than 20 percent down when buying a new home, lenders often require you to have private mortgage insurance (PMI). Private Mortgage insurance helps protect lenders and mortgage investors from severe financial losses in case the loan is not repaid. Although the benefits may not be seen on the surface these insurance premiums allow many lenders to offer loan programs with very minimal down payment requirements.  Without private mortgage insurance buying a home would become much harder since the bank would have to compensate for the risk in another way.  There are many ways you can avoid paying private mortgage insurance and still maintain low monthly mortgage payments. From a one time buyout to using a combination first and second mortgage at closing there are many attractive ways for you to finance your new home. Below is a list of just a few of the programs available:

First and Second Mortgage Combination at Closing

Private Mortgage Insurance can be avoided when a consumer splits the new mortgage amount into a first and second mortgage where the first mortgage does not exceed 80%.  With today's rates low as they are this is a very popular choice since people with good credit will usually have a lower rate on their second if its tied to prime.  some examples and common terms of this method of financing are:

80-15-5 Mortgage

Refers to an 80% first mortgage, 15% second mortgage and 5% down payment

80-10-10 Mortgage

Refers to an 80% first mortgage, 10% second mortgage and 10% down payment

80-5-15 Mortgage

Refers to an 80% first mortgage, 5% second mortgage and 15% down payment.

One Time Tami  -  TAMI stands for Tax Advantage Mortgage Insurance and is offered by some banks as an option for borrowers to avoid mortgage insurance.  Targeted more at consumers buying homes for longer periods of time this option allows the consumer to pay a higher interest rate on the first mortgage and is not required to take mortgage insurance.  Since the interest n the first mortgage is tax deductible (unlike your monthly PMI payments) this can have many benefits.


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