PMI or Private Mortgage insurance is one of the ways of protecting the lender from buyers who will not pay off their money every month in time. Its payment is added to the cost of your home when you are not able to pay a fifth of the value of your home as down payment. Its presence is the reason lenders have been able to lend money to buyers who do not have any means to put down a down payment of more than 20%. Some lenders do not even require buyers to put in a down payment at all, and in a sense this is advantageous to the buyer. However, in the long run, it will cost you more so it is better to just avoid it altogether.
Avoiding it is very easy, you will first of all figure out what it is when you are looking for a lender for your mortgage loan. While you may not be able to pay off 20% of the mortgage loan, it is important to be realistic and reduce the PMI you will have to pay by buying a home that you can afford. Sometimes people will place on themselves a lot of burdens in the name of buying a home. You should not clear you bank balance in the name of paying for a house, and take the longest time possible to pay for it if you are not in control of your finances. Do not be in a hurry to buy a home for yourself and ensure that you are in control of your finances before you get a home for yourself.
Avoid PMI by paying off 20% of the value of your home, either by borrowing this amount from your family and friends, getting a second mortgage etc. figure out how to satisfy your bank’s need for the 20% before you start on the loan. Get advice from friends and family who have paid for their homes first, do not be in a hurry to make a decision. Ensure that you are well aware of the pros and cons of every option you take.
Talk to your bank into removing PMI from the amount you have to pay, as this will help in ridding your debt burden. While this will increase the amount you have to pay to your bank each month, it will not be as much as when you had to pay PMI.