How To Avoid PMI (Private Mortgage Insurance)

Do you need to know how to avoid PMI (Private Mortgage Insurance)? If you are purchasing a home and unable to put down a down payment of 20% of the purchase price the lender will most likely require that you carry PMI or Private Mortgage Insurance. The problem with this kind of insurance is that it is very expensive. Private Mortgage Insurance is usually $300-$500 per month or more. This is a huge expense for the home buyer. Are you ready to learn how to avoid PMI (Private Mortgage Insurance)?

To avoid PMI you need to put down 20% of the purchase price of the home. This can be done by one of the following:

GIFT - If you have a friend or family member that can give you the amount you need to get a full 20% down payment you can receive a gift. They will have to write a letter to the mortgage lender for your home loan to tell them that the amount of money given is a gift and that you do not need to repay it. Of course, if you want to repay it or are required to repay it by the gift giver, that is another story.

SECOND MORTGAGE - You can try to get a second mortgage loan at the same time as your first mortgage loan. Many times a mortgage broker can find a lender to give you enough to have a 20% down payment. You will then have a second small home loan that you will need to pay and the interest rate on that loan will sometimes be more than the interest rate on your primary mortgage loan.

ACCEPT PMI - If you want to accept the PMI with the knowledge that you will only need to pay it for a short period of time and then you will refinance your loan, you can do it. You will need to make sure that you do not have a pre payment penalty with your lender.

This is how to avoid PMI (Private Mortgage Insurance).

How To Get Out of (PMI) Private Mortgage Insurance

How To Get Out of PMI Private Mortgage Insurance

If you bought a home and did not put down 20% you may be paying private mortgage insurance (PMI) each month. Private mortgage insurance can sometimes run as high as $300-$500 per month. That is a lot of extra money to pay for virtually no reason.

If you have found yourself in the situation, the best thing to do is refinance. You will need to check with your current lender to find out if you have a pre-payment penalty. A pre-payment penalty is a fee that you will have to pay if you pay off your mortgage loan early. Sometimes there is a pre-payment for just a few years at the beginning of your loan.

If you have a pre-payment penalty you may want to wait until the penalty time frame is over. If you do not have one, you will want to refinance as soon as your house appraisers for the amount you need.

Your house will need to appraise high enough so that your loan is only 80% of the value or less. When you think it will appraise for that amount, call an appraiser. Make sure you use a qualified appraiser. You may want to contact a lender first and they can help you find an appraiser, they may even pay for the appraisal for you.

The most credible lenders are the ones that you already work with such as your bank. Contact a lender today to see if you can get out of (PMI) private mortgage insurance.

Calculate Non Taxable Mortgage Interest For California Residents

Taxable Mortgage Interest For California Residents

Many residents of California are concerned that they may not be able to write off their mortgage interest. This is simply not true. You can write off your mortgage interest on your taxes, but excessive mortgage amounts will send a red flag to the IRS.

The tax code allows Californians to calculate the allowable write off by adding the original price of their home, plus the dollar amount of any improvements (actual amounts spent on improvements) and $100,000. Once these three items are added up they cannot be more than the homeowner owes on the property.

Any amount over the calculated amount cannot be written off on your taxes.

Example:

$150,000 Original Price of Home
$ 30,000 New kitchen
$100,000
_________
$280,000

Current loan amount $250,000 - Amount is less than allowed so you are within your limits.

Current loan amount $350,000 - Amount is more than allowed so you are not able to deduct mortgage interest on the $70,000 over the calculated amount, plus the IRS may audit you.