Oregon homebuyers and mortgage buyers tend to have many questions about private mortgage insurance, or PMI. That’s right. pmi can affect the size of your monthly payments, as well as the overall costs of your loan. therefore, it makes sense to learn as much as you can about oregon mortgage insurance.
To help you in your research, we have created a list of frequently asked questions about the Oregon PMI topic.
Reading: How much is mortgage insurance in oregon
what is mortgage insurance?
Mortgage insurance, or MI, is a specialized type of insurance policy that compensates lenders for losses resulting from a borrower’s default.
There are basically two types: private and government. Private mortgage insurance, or PMI, generally applies to conventional mortgage loans that represent more than 80% of the value of the property. Federal Housing Administration (FHA) loans also have mortgage insurance, but it is provided by the government.
You might be thinking, “great, here’s one more thing I have to pay for.” But there are some significant benefits to PMI, from the borrower’s perspective. The main benefit is that it allows you to buy a house sooner, without having to save for a 20% down payment. In fact, today’s borrowers can qualify for conventional home loans with as little as a 3% down payment. this would not be possible without mortgage insurance.
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frequently asked questions about the oregon pmi
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here are some answers to frequently asked questions related to pmi policies in oregon.
will my monthly mortgage payments increase because of pmi?
yes, but not by much. There are several components that make up a monthly mortgage payment. They include the principal amount borrowed, interest, property taxes, property insurance, and (in some cases) mortgage insurance. Your monthly payments are primarily determined by the loan amount and interest rate. private mortgage insurance represents a relatively small percentage of your monthly payment.
how much does private mortgage insurance cost in oregon?
Cost may vary based on several factors. Generally speaking, a lower loan-to-value (LTV) ratio will result in lower PMI premiums. So, for example, you would pay less pmi with a 10% down payment compared to a 3% down payment.
The cost of private mortgage insurance in Oregon also varies based on the type of mortgage loan you use and other factors. the cost can range from 0.3% to 1.5% of the original loan amount per year, in most cases. we can provide you with a more accurate estimate based on your specific circumstances.
can i cancel my pmi policy at some point?
yes, in oregon it is possible to cancel private mortgage insurance when you have paid your balance up to a certain level. PMI can generally be canceled when the mortgage balance reaches 80% of the home’s original or current appraised value.
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This applies to conventional mortgage loans, in particular. Most borrowers using FHA loans are required to pay mortgage insurance for the life of the loan (per current HUD guidelines). that’s one of the advantages of using a conventional loan with pmi, instead of an fha mortgage with government-provided insurance
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how can i avoid paying mortgage insurance?
There are several financing strategies available that could help you avoid PMI altogether. One way to do this is by taking a slightly higher mortgage rate. This is known as lender-paid mortgage insurance, or LPMI. Here, the borrower agrees to a higher rate in exchange for avoiding PMI.
It is also possible to combine two loans so that neither represents more than 80% of the value of the property. Remember, having a loan-to-value ratio greater than 80% is often what triggers the PMI requirement in the first place. the 80/10/10 strategy is an example. here, the borrower takes out a first mortgage loan for 80% of the purchase price, uses a second loan for 10%, and pays the remaining 10% as a down payment.
Oregon borrowers can also avoid paying mortgage insurance by making a down payment of 20% or more. this keeps the ltv below 80%.
Military who are eligible for a VA loan can avoid mortgage insurance altogether, in most cases. And there’s the added benefit of 100% financing, which means no down payment. but this program is limited to military and veterans.
related: oregon’s first time buyers guide
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if you need a mortgage, sammamish mortgage can help. We are a local loan company serving the Pacific Northwest region, including Washington, Idaho, Colorado, and Oregon. We’ve been offering a wide variety of mortgage programs and products with flexible qualifying criteria since 1992. Contact us if you have any questions or are ready to apply for a home loan.
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