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REAL ESTATE
Private Mortgage Insurance No Longer Such a ‘Dirty Word’
Here’s how to decide whether to avoid it
So despised is that buyers jump through all manner of hoops to avoid it. When I was a first-time buyer, I put down 10 percent and then took a second mortgage to cover the other 10 percent.
By cobbling together 20 percent down, I could qualify for a with no PMI. Never mind that the rate on the second mortgage was higher than the one on the primary mortgage, or that I had a second monthly payment to keep track of. Evading PMI was worth it.
However, in recent years, private mortgage insurers have lowered their rates, and elaborate strategies to elude PMI don’t seem as attractive.
“I am a big fan of mortgage insurance — and it’s kind of a dirty word. When you talk to customers, they don’t tend to like it,” says Emanuel Santa-Donato, senior vice president at Tomo Mortgage. “But if you look at the actual cost of the mortgage insurance relative to being able to put down 3 or 5 percent, it is quite advantageous. That money could be used elsewhere.”
