January 23, 2024
If you’ve made the decision to make 2024 the year you buy a house, you may have prepared yourself for the cost of your mortgage payment – but have you prepared for another payment you’ll have to have on top of your mortgage if you’re making a down payment of less than 20%?
If you’re buying your first home, 20% down is probably a tall task. Putting 3.5% down might be easier for you, but what you may not know is that putting less than 20% will cost a little more monthly (which isn’t always a bad thing). However, this might not necessarily be part of your mortgage payment but an additional fee called Private Mortgage Insurance.
When you start to look at houses, you might be tempted to streeetch your price range just in case your dream home is a little outside of your budget.. If you prepare for this early, it could help you get approved for just a little more so you can buy that dream home.
Now, you may be asking yourself; what is this cost and how much do I have to prepare for it?
Private Mortgage Insurance (PMI) is the “cost” of putting a small down payment, and it can go up or down based on your credit score just like your mortgage payment. Here’s an example for you: Let’s say you’re buying a $300,000 home, with $5,000 for a down payment and a 7% interest rate… your monthly PMI payment could be $362 – or it could be as low as $172 if you have great credit (700-719).
Here at UQUAL, our job is to get you ready for these bumps in the road. If you’re seeing this, chances are your loan officer would love to be your guide and ally through this complicated journey, and they trust UQUAL to be your partner through this process as well.
If you have ANY interest in buying a house in 2024 – a phone call is free.
Your future self will thank you!