Private Mortgage Insurance can be a key to homeownership, allowing you to secure a mortgage with a smaller down payment and start building equity sooner.
Certified Mortgage Advisor and Raleigh Mortgage Broker Kevin Martini
Many mortgage programs today allow homebuyers to use less than a 20% down payment when buying a home. This often necessitates paying Private Mortgage Insurance (PMI), which slightly increases your mortgage payment. However, PMI is a significant benefit in today’s housing market.
3 Reasons Why PMI Is Smart
Buy Now Instead of Waiting
In a market where home values increase, waiting to save a larger down payment can cost you. For example, if homes in your area appreciate by 3% per year, a $400,000 house today will cost $12,000 more next year. By purchasing now with PMI, you secure your home at today’s prices and start building equity immediately. Waiting could mean missing out on potential savings and increased home equity.
Free Up Funds to Pay Off Higher Interest-Rate Debt
Using PMI can be a strategic move if you have high-interest debt, such as credit card balances with a 19% interest rate. Instead of putting down 20% on your home, you can use some funds to pay off your high-interest debt. With mortgage rates around 7%, reducing your expensive credit card debt first can result in significant financial savings.
Keep Your Funds Invested
A large down payment means less money available for other investments. If your investments yield a higher return than the cost of a mortgage with PMI, it might be wiser to put less down and keep your funds invested. This approach allows you to benefit from potential investment growth while purchasing your home.
The Path Forward
Private Mortgage Insurance (PMI) might initially seem like an added expense, but it can offer substantial financial benefits. PMI can be a smart strategy in today’s housing market by allowing you to buy now, manage high-interest debt, and keep your funds invested.
For more insights on how PMI can work for you and other mortgage options, contact Kevin Martini at Martini Mortgage Group. As a leading Raleigh Mortgage Broker and Raleigh Mortgage Lender, we can help you navigate your home-buying journey effectively. Visit our website for more information on Raleigh Real Estate and mortgage solutions.
About the Author
Kevin Martini is dedicated to empowering families to build generational wealth through real estate, utilizing cutting-edge mortgage strategies. More than just a Raleigh Mortgage Broker, Kevin is widely regarded as one of the best in the field due to his status as a Certified Mortgage Advisor and his commitment to a fiduciary approach, ensuring that his client’s best interests are always at the forefront. A prominent figure in both the Raleigh mortgage and broader real estate industries, Kevin has successfully originated over a billion dollars in home loans. His expertise helps clients navigate the complexities of financial planning to achieve their real estate aspirations.
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