All you need to know about Private Mortgage Insurance
All you need to know about Private Mortgage Insurance
Purchasing property is one of the most important decisions you will make in your lifetime. Various factors are involved, such as finding the right neighbourhood, getting the best mortgage rate possible, and much more. But before you take all the reasons mentioned above into consideration, you must understand how a private mortgage can help you get the home of your dreams. Private mortgage insurance is a type of insurance coverage where lenders (not traditional lenders, i.e., banks) provide a mortgage to borrowers who do not make a large enough down payment. This type of mortgage protects the lender from any financial losses if they are unable to pay back their loan.
Below-mentioned is all you should know about private mortgage insurance:
1. Helping you get the home of your dreams:
Even though private mortgage insurance is an extra cost associated when purchasing property, it can help secure the property of your dreams.
2. The cost of private mortgage insurance
It depends on the lender and how much money they are willing to place on the loan. It is generally calculated as a percentage of the total loan amount and ranges between 0.58% to 1.86%. If the loan amount of the property is huge, you will end up paying more for your private mortgage insurance. Another factor to be considered for the cost of private mortgage insurance is the loan-to-value ratio (LTV). It is how much amount you are borrowing of the total value of the house. The more money you put on the property, the less the LTV ratio is. For example, if you place a 20% down payment on a property, the LTV is 80%. Another factor that influences the cost of private mortgage insurance is your credit score.
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Payment options
As part of costs incurred to closing, you can either pay an amount up-front or pay yearly until you no longer need to pay for it. Or you can incorporate the premium into your loan and make monthly payments in addition to making your regular loan payments.
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Completely paying off your private mortgage insurance
If you make regular payments until you have secured 20% of the equity in your property or a loan-to-value ratio of 80%, you are required to make payments to your private mortgage insurance. Another instance could be that the value of your property increases over time, and it has built up more than 20% equity. It is highly suggested that you make extra payments towards your mortgage as it is a good financial move because the funds can be utilized to pay off debts that are high in interest.
Contact the team at 1ONEFUND Financial Group
If you are looking for a private mortgage in Oshawa, look no further than 1ONEFUND Financial Group. With a wealth of experience in the business, you can rest assured of a top-class service. Call us today at 1-833-201-3863 to schedule a free consultation or to find out more information.