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In most instances, if you want to finance
in excess of 80% of the value of Real Estate , the lender will want
to obtain Private Mortgage Insurance to protect against a loss in
the event that you default. Guess who pays the premiums? Right!
Generally they are paid to the lender in monthly installments along
with your regular monthly payment. The cost of the premiums will be
base upon the type of mortgage that you are obtaining (fixed rate
versus adjustable) and the specific LTV. EXAMPLE: Fixed Rate
Mortgage @ 90% LTV the annual premium on a $100,000 would be $600
approximately. In addition to the additional monthly cost of the
financing, you now have additional step to the mortgage process.
Loans with PMI usually must have a higher standard, as they are
considered to be a HIGH RISK.
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