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If you’re about to buy a home, a down payment is what you need to put in. But if it amounts to less than 20%, you will have to purchase PMI or Private mortgage insurance policy even if it protects the lender and not you.

Getting a PMI isn’t always a good decision for all home buyers. Given below are 4 such reasons why you should take out a mortgage without paying for PMI.

PMI Costs:

What you pay for buying the PMI policy is 0.5-1% of the mortgage amount. Say for example, you have taken a loan of $150,000. The costs of PMI for such a loan will be maximum $1500 (1% of loan amount), that is, $125 on a monthly basis. Now, if the average home price is around $250,000, then one has to spend $2500 (1% of $250,000) on the insurance annually and $208 nearly ($2500/12) a month. And that’s almost what you may be paying on your auto loan each month! So, it’s better that you avoid going for the PMI.

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Accidents are said to be untold disasters. But, these chance happenings have become very common in our day to day life. Such unwanted coincidences might lead you to three different consequences.

1. You may not be affected at all.
2. You may die.
3. You might be left impaired.

If you are not affected at all, then you are favored by your luck. In this case you are lucky because you have managed a narrow escape. But, in a way, it is also an alarm for you to be cautious.

If you die, you are still lucky enough. As an escapist proper you have got a chance of exit from the show. Only if you have dependents, they would have to face the situation in due course.

On the other hand, if you are left impaired, your luck is really unfavorable. In such a state, even if you want an exit you cannot come out of it. You are trapped in such a manner that you would not only have to face the consequences, but would also have to be a part of the entire struggle as a disabled person. The aftermath can take disastrous turns under such conditions.

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