Lenders are protected by Private Mortgage Insurance, if the buyer didn’t repay the loan. He will generally require this when the down payment is less than 20%. This has both pros and cons
Private Mortgage Insurance has it’s Good Points
This can allow people to get more of house without saving the required 20%. Although it does not get a home insurance, it will helps you to get a bank insurance if you qualify for it.
The Downfalls of PMI
You have to pay high monthly investment. They are not tax free. Getting the mortgage vale to 80% takes a longer time.
A Piggyback Loan:
You can avoid Private Mortgage Insurance with this. They are tax deductible. You will be able to take 80% of purchase price and can put it on the traditional mortgage. This will help you in the long run.
The Finance Single Premium Option:
Using this you can lower your monthly payment.
No-PMI loans:
You will have high interest rate but no need to pay the private mortgage insurance premium.