| Starting on January 1, 2007, private mortgage | | | | home equity loan. Often it will be have an |
| insurance became a deductible expense for new | | | | adjustable interest rate and/or a balloon payment |
| borrowers with less than a $100,000 income. This | | | | that will come due in 3 to 5 years. |
| new legislation will help homebuyers who may | | | | So Which is Best? PMI or Piggyback? |
| have chose to a more risky piggy-back type of | | | | It will really depend on your situation. With the |
| loan to avoid PMI over the past few years. | | | | deductible aspect to PMI, it is worth considering |
| So what is PMI? | | | | again. If your home appreciates or you are able |
| In a conventional mortgage, a buyer is required to | | | | to put in some "sweat equity" to increase the |
| put down a 20% down payment based on the | | | | accumulated equity of the home to the 20% of |
| sale price of the home. Private mortgage | | | | the appraised value, in most cases the PMI will be |
| insurance is paid when a buyer does not the full | | | | cancelled. However with a second loan, you will |
| 20%. The fee is paid monthly by the buyer to | | | | continue to make payments until the loan is paid in |
| protect the lender in the event of foreclosure. It | | | | full. |
| is paid until equity accumulates to a point where | | | | To make the best decision, discuss your all |
| there is 20% ownership of the home. | | | | options with your Realtor and Mortgage or Loan |
| Avoiding PMI with Piggy-back Loans | | | | Officer. Working with trusted professionals to |
| In recent years, many buyers in an effort to | | | | explain all aspects of various loan products help |
| avoid paying PMI have used a piggy-back or | | | | you to select the best mortgage that works to |
| secondary loan for their down payment. In this | | | | meet your financial goals. |
| scenario, the second loan is often similar to a | | | | |