When securing a home loan in Oklahoma, many homeowners find themselves facing private mortgage insurance (PMI) costs. PMI is often required when a borrower has a down payment of less than 20%. Fortunately, there are several strategies you can implement to lower your PMI costs and keep more money in your pocket.
1. Increase Your Down Payment
One of the simplest ways to reduce or even eliminate PMI is to increase your down payment. If you can manage to put down 20% or more, many lenders will waive the PMI requirement altogether. Consider saving for a few extra months to boost your down payment percentage.
2. Shop Around for Lenders
Not all lenders offer the same PMI rates. Take the time to shop around and compare different lenders' terms and rates. Some may provide lower PMI fees or have special programs that could benefit you. Always ask about PMI options and how prices may differ between institutions.
3. Consider a Piggyback Loan
A piggyback loan involves taking out a second mortgage to cover part of your down payment. This can help you avoid PMI by splitting the total loan into two parts. For example, you might take out an 80% mortgage with a primary lender and a 10% second mortgage, leaving just 10% for your down payment.
4. Opt for Lender-Paid Mortgage Insurance (LPMI)
Some lenders may offer Lender-Paid Mortgage Insurance, which can be a good alternative to traditional PMI. With LPMI, the lender pays the mortgage insurance premium upfront, which often leads to a higher interest rate on your loan. However, this option can save you money if you plan to stay in your home for a long time.
5. Maintain a Good Credit Score
Your credit score plays a major role in determining your PMI rate. A higher credit score typically results in lower PMI premiums. Make sure to maintain good credit by paying bills on time, reducing debt, and checking your credit report for inaccuracies. Every little bit helps in lowering the costs associated with PMI.
6. Monitor Your Home’s Value
Property values can fluctuate over time. If your home appreciates significantly, you may reach the 20% equity threshold sooner than expected. Stay informed about your home’s value through real estate websites and local market trends so you can request to cancel your PMI when appropriate.
7. Pay Extra on Your Mortgage
Consider making extra payments toward your mortgage to reduce the principal balance faster. This can increase your equity more quickly and help you eliminate PMI sooner. Just check with your lender to ensure that there are no prepayment penalties.
By implementing these strategies, you can effectively lower your private mortgage insurance costs in Oklahoma. Being proactive and informed will not only save you money but also make your journey to homeownership more affordable.
