how to avoid private mortgage insurance

Understanding the requirements on your mortgage can streamline the home- buying process. Know what private mortgage insurance is and what your options .

Homebuyers with a down payment of less than 20 percent are usually required to get private mortgage insurance, or PMI. This is an added annual cost — about .03 to 1.5 percent of your mortgage.

The easiest way to avoid PMI is by making a down payment of 20 percent or more. If you do this, you won’t have mortgage insurance on any loan. Another way to avoid PMI is to use a second mortgage. The first mortgage must be capped at 80 percent of the home’s value to avoid PMI, and a second mortgage will usually allow for another 10percent financing on top of this, for a total of 90 percent financing.

How can we buy for 10 percent down and avoid expensive private mortgage insurance? Should we use our primary residence as mortgage collateral? We’ve noticed many two-story houses in our area that have.

Private mortgage insurance is something that many lenders require if a mortgage is considered "high risk" or if the down payment is not.

However, there is a way to buy a home with less than 20% down and avoid the dreaded PMI. Shift the Burden to the Mortgage Company PMI can be paid by the lender instead, under a program called Lender.

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