Why Private Mortgage Insurance May Be Necessary

Published by julia | Filed under Buyer / Seller Tips, Market Trends, Pinellas County Homes, Real Estate, Shout Outs

When you first buy a home, it can be very frustrating and complicated process, but it can also be extremely exciting. There is nothing quite like being able to call a home your own and have the freedom to decorate it and change it any way you want. As long as you don’t live in a deed restricted community, you can do virtually anything you like with your property and no one can say anything about it. It’s a wonderful thing and something everyone should experience. However, be aware that owning your own home can cost more money than you think. There’s taxes and property insurance to consider, and in many cases, your lender will require you to purchase private mortgage insurance.

Unfortunately, life happens and sometimes you won’t quite be able to make your loan payments all the time. This is where private mortgage insurance comes in. When you first buy your home, most lenders expect you to pay a large down payment of at least 20 percent. If you are unable to do this, then you need to purchase a loan protection program known as  private mortgage insurance.

This insurance coverage will protect the lender in case you are ever unable to make your monthly payments. This insurance doesn’t cover anything else though. If your home catches fire or is subject to a natural disaster, you better hope you have some other type of insurance protection. Private mortgage insurance only covers you if you fail to make your payments.

Even if you don’t need it, it doesn’t hurt to get private mortgage insurance, just in case. No job is 100 percent reliable and if you have to relocate or change jobs, you won’t have to worry about your house payment if you happen to go a week or two without a paycheck. It’s better to be safe than sorry, after all. Even if your lender requires you to get this insurance, once you’ve paid enough into your mortgage that you have 20% equity, the requirement to have it will be dropped, which will save you some money by lowering your monthly payments if you decide to get rid of it.