It is always good news for Buyers when lenders expand the range of the loan types available. Lenn Harley makes a great point in the comments in the original post regarding the deductibility of the interest, whereas PMI is not deductible.
It seems like it was just yesterday that the sub-prime and Alt-A loans were all the rage. Then, in the snap of the fingers, everything was gone. Vanilla was the only thing that was left. FHA, Conventional, VA were really the only loans of substance with a deep imprint on the market.
Time continue to change and now, NO PMI loans are back. PMI is the acronym for Private Mortgage Insurance. What that means is that if you're buying a home with a conventional loan, you now have the ability to buy a home without private mortgage insurance. What this means to the average consumer is that if you're putting 5% down or greater, then you may be eligible for one of these loans. You need 5% and good credit.
The way it works is that the lender bumps the rate up from the standard mortgage rate. You pay more interest with each payment, but more importantly, your monthly payment is less than you would have had if you had a loan with private mortgage insurance.
Last Friday, I gave this loan to a client of mine who only put 5% down. She's paying $84 dollars more per month in interest, but her payment is $124 less overall had she gone with private mortgage insurance.
It's back! It may be temporary, but it's a valid option for those who want to maximize their cash flow and for those who have the credit to qualify. Ask your loan officer for more details.
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