Equity 123 Lending

PRIVATE MORTGAGE INSURANCE (PMI)

Mortgage options refer to the various choices available to homebuyers when selecting a loan to finance their property purchase.

PRIVATE MORTGAGE INSURANCE (PMI)

Private Mortgage Insurance (PMI) is a type of insurance that protects lenders in case a borrower defaults on their mortgage payments. It is typically required for borrowers who make a down payment of less than 20% on their home purchase. PMI allows borrowers to secure a mortgage even if they don't have a substantial down payment, but it does come with additional costs.

Meaning of Private Mortgage Insurance

Private Mortgage Insurance, commonly called PMI, is an insurance policy that safeguards lenders in the event of borrower default. It provides financial protection to the lender, allowing them to recover a portion of the outstanding mortgage balance if the borrower fails to make payments. PMI is typically required when the down payment is less than 20% of the home's purchase price.

Factors Affecting Private Mortgage Insurance

Several factors influence the cost of PMI and the duration for which it is required:

  • Loan-to-Value Ratio (LTV): A higher LTV ratio, resulting from a smaller down payment, generally increases the PMI premium.
  • Credit Score: Borrowers with a lower credit score may face higher PMI rates, as it is perceived as a higher risk for the lender.
  • Loan Program: Different loan programs may have varying PMI requirements and rates. FHA loans, for example, have their mortgage insurance known as MIP (Mortgage Insurance Premium).
  • Property Type: Certain property types, such as investment properties or condos, may have different PMI requirements.
  • Loan Term: The length of the loan may affect the PMI duration and cost.

Key Features of 1099 Mortgages

Private Mortgage Insurance plays a crucial role in expanding homeownership opportunities for individuals who may not have a substantial down payment saved. It enables borrowers to secure a mortgage with a lower initial investment, making homeownership more accessible. In addition, PMI is an added layer of protection for lenders, reducing their risk in approving loans with higher LTV ratios.

Pros of Private Mortgage Insurance

  • Access to Homeownership: PMI allows borrowers to purchase a home with a down payment of less than 20%.
  • Loan Approval: PMI can increase the likelihood of loan approval, even for borrowers with limited upfront funds.
  • Flexible Payments: PMI payments are often included in the monthly mortgage payment, making it convenient for borrowers.

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20% Down payment
Perfect Credit
Interest Rates
Finding A House
30-Year Fixed-Rate Mortgages

20% Down payment

Risk Factors

You need 20% down to purchase a home.

Solution

This isn't true. If you take out a conventional loan, you can buy a home with as little as 3% down.

Perfect Credit

Risk Factors

You won’t need a credit check.

Solution

Credit plays a significant role in your ability to get refinancing. However, borrowers with an excellent credit profile are rewarded with the lowest interest rates.

Interest Rates

Risk Factors

Mortgage interest rates are the same no matter what lender you work with.

Solution

The truth is that rates can vary from lender to lender. So for your financial safety, you should shop around when looking for a mortgage loan.

Finding a house

Risk Factors

Find a house, then worry about a mortgage.

Solution

This is terrible advice at any time, but in a hot seller’s market like today’s, believing this myth can lead you to miss out on a home altogether.

30-Year Fixed-Rate Mortgages

Risk Factors

A 30-year fixed-rate mortgage is always the best choice

Solution

If you can afford higher payments, you can own your home outright in less time and for less money with a 15-year fixed-rate mortgage.
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Equity 123 Lending

Equity 123 Lending is a licensed mortgage broker.

All loans originated by Equity 123 Lending are funded by third party lenders. Equity 123 Lending INC, and Equity 123 Lending, LLC. are authorized to do business as “Equity 123 Lending” in certain states.

Equity 123 Lending is an equal housing lender.
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Lake Forest, California 92630
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Disclosure:
The content provided within this website is presented for information purposes only. This is not a commitment to lend or extend credit. Information and/or dates are subject to change without notice. All loans are subject to credit approval. Other restrictions may apply. Mortgage loans may be arranged through third party providers.
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