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Loan Mechanics

What’s PMI and is it good?


PMI is Private Mortgage Insurance.

PMI allows you to finance a home with less than a 20% down payment. For an extra monthly cost to you, PMI provides default insurance to the lender.

Thinking of saving more to avoid PMI? Accumulating what can be tens or even hundreds of thousands of dollars for a down payment is a challenge for even the most industrious savers. Delaying a purchase while rates and prices rise may be more costly than PMI in the long run.

PMI allows you to buy what you want now vs. what could end up being far less of a home after you’ve managed to save a larger down payment later. Reach out today and see if you might be ready to buy with a little help from PMI.  Consider, too, checking out other blog posts on this topic (click here, then scroll down to see other posts) and the series of posts entitled Loan Mechanics: The Inner Workings of a Mortgage which covers MI and many other similar topics related to obtaining a mortgage.

What is LTV?


LTV is Loan To Value.  
An acronym often encountered in the home buying or refinancing process, LTV describes loan amount as a percentage of the purchase price or value of property. For example, an $80,000 loan on a $100,000 property equals an 80% LTV.

You can also think of LTV as the inverse of your down payment. If you put 10% down, your LTV will be 90%. The LTV may be slightly higher if costs such as upfront mortgage insurance or other funding fees are added to the loan amount.

If you have questions about LTV or mortgage financing, please give us a call. We’re happy to help.  Contact my team today and consider reading the other posts in this current blog series: Loan Mechanics: The Inner Workings of a Mortgage