3 ms·

I believe it's 'PMI' your referring to. You don't need 20% to avoid that anymore with a lot of programs, it's down to 5% or even 3.5% if your credit is high eno

I believe it's 'PMI' your referring to. You don't need 20% to avoid that anymore with a lot of programs, it's down to 5% or even 3.5% if your credit is high enough. 720 is the sweet spot right now where you should pretty much never have PMI. There's also some incentives out there right now where the lender pays the PMI for you.

breischl 10y ago
In addition, PMI was not originally tax deductible. They made it tax as one of those stimulus measures, I think around 2008 or 2009 (about 1 month after I paid mine off... not that I'm bitter or anything). Since PMI is tax deductible now that makes it effectively less expensive, and avoiding it less advantageous/important.
massysett 10y ago
You don't get something for nothing here. The low down payment loans that lack PMI generally have higher rates. Lender-paid PMI always comes with a higher rate. Even if your credit is well above 720 it can still be better to pay PMI than to have a higher-rate loan. The PMI eventually goes away; to get rid of a higher rate, you have to refinance. The best choice depends on factors such as how long you will keep the home, but if you're putting less than 20 percent down, avoiding PMI is not a worthwhile objective. PMI might actually be the best deal.
pasbesoin 10y ago
Yes, "PMI". I think I have to agree with my child co-commenters, that if they're waiving PMI in one sense, you're paying for it in another. You always have to add up all the pieces -- over their respective lifespans -- and see where your total costs come out. As well, whether retaining more money up front and pumped into your own investments is going to outperform any additional eventual expense, allowing you net (and also considering taxes) to come out ahead. Past a certain point, I'd say, make sure you're doing pretty well, financially, even if you end up leaving a couple of hundred or even a thousand on the table over the lifespan of the load. Instead, focus your remaining time and energy on having a good life. Worth far more than worrying about the last dollar.

breischl 10y ago

In addition, PMI was not originally tax deductible. They made it tax as one of those stimulus measures, I think around 2008 or 2009 (about 1 month after I paid mine off... not that I'm bitter or anything). Since PMI is tax deductible now that makes it effectively less expensive, and avoiding it less advantageous/important.

massysett 10y ago

You don't get something for nothing here. The low down payment loans that lack PMI generally have higher rates. Lender-paid PMI always comes with a higher rate. Even if your credit is well above 720 it can still be better to pay PMI than to have a higher-rate loan. The PMI eventually goes away; to get rid of a higher rate, you have to refinance. The best choice depends on factors such as how long you will keep the home, but if you're putting less than 20 percent down, avoiding PMI is not a worthwhile objective. PMI might actually be the best deal.

pasbesoin 10y ago

Yes, "PMI". I think I have to agree with my child co-commenters, that if they're waiving PMI in one sense, you're paying for it in another. You always have to add up all the pieces -- over their respective lifespans -- and see where your total costs come out. As well, whether retaining more money up front and pumped into your own investments is going to outperform any additional eventual expense, allowing you net (and also considering taxes) to come out ahead. Past a certain point, I'd say, make sure you're doing pretty well, financially, even if you end up leaving a couple of hundred or even a thousand on the table over the lifespan of the load. Instead, focus your remaining time and energy on having a good life. Worth far more than worrying about the last dollar.