Are you searching for a Beacon Hill condo for sale? And if so, did your bank/lender tell you, that you will need private mortgage insurance, also known as PMI.
While experienced Beacon Hill condo buyers might know the thought process behind private mortgage insurance — commonly referred to as PMI — first-time downtown Boston real estate buyers might be new to the term and have no idea what it is or why it’s needed.
If you’re purchasing Boston real estate and your downpayment is less than 20% of the purchase price, your mortgage lender will require private mortgage insurance. Very simply, PMI protects the lender in the event that you can no longer make your mortgage payment. The cost for PMI is rolled into your monthly mortgage payment and automatically goes away once you’ve built up equity of 20% in your Beacon Hill condo.
Nationally, the average downpayment on a home last year was 13%, which means there are a lot of homeowners required to carry PMI. The overall cost of the policy is based on your loan-to-value ratio and typically costs anywhere from $30 to $70 per month.
We hope that helps clear up the issue of PMI and why it’s required, but if you have additional questions or concerns, please contact The Ford Realty Team today!