Private mortgage insurance or PMI is a form of protection that the lender can get from you in case you default on payment. In Canada, a PMI is not required provided you can pay 20% of the down payment required for purchasing a home. Paying the PMI can be spread throughout the term of the loan thus forming part of your mortgage payment. Wondering how you can get the best out of PMI in case you avail of one? Read on to find out the answer.Grab it if you want to get the home that you want
This insurance, as mentioned, is recommended for those of you who have not saved the enough amount required to pay the 20% down payment for a purchase. For those of you wanting to have that dream home for a long time, grabbing every chance you get with a PMI will mean more benefit on your part. In fact, if you happen to apply for a PMI today and you have paid for at least 22% of your loan, the mortgage insurance can be cancelled. This will mean lower monthly amortisations after.
You can look at the picture this way too. By grabbing every chance you get to avail of a PMI, you can be sure that you will have the home of your dreams as soon as possible. Whether what you have saved at the moment is only 10% or even 5% of the required down payment, you can avail of the loan to help you get that property. This is a faster solution rather than waiting for that time to save the remaining 10% or 15% for the required down payment.Try the so-called lender-paid mortgage insurance
The lender-paid mortgage insurance works in such a way that the PMI will be waived by the lender. You as a buyer, though, are expected to pay a higher interest rate on your loan. This set-up is ideal for those of you who have high credit scores. But before you even grab the bait of using the lender-paid mortgage insurance, you should seek the help of home loan experts so that they can help you arrange for this type of mortgage option.Grab the best offer for PMI
If you want to take advantage of PMI, you always have to get the best offer you can have. Know the terms of payment and how much it will cost you if you add it in your monthly amortisation. Compare it with the possibilities of loaning the amount you need to pay for the 20% down payment in case you avail of a separate loan from a lender other than your mortgage lender. When you have made all the comparisons, you will be able to determine the best offer possible.
Mortgage insurance will always be an expense but as long as you have thought of ways to get the best out of it, you will be able to put yourself in a win-win situation. For more about private mortgage and all other facts relating to it, browse through our pages.