How to Buy Your Home Without Putting Your Life Savings Down

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Buying a house is incredibly exciting and excruciatingly costly. Most people assume that you need to put down at least 20% to even qualify for a mortgage. While I’m 100% in favor of living within your means, I also believe that people are entitled to own their own home.

If you don’t have the required 20% down payment, you can still qualify for a mortgage along with the purchase of mortgage insurance.  Mortgage insurance (MI) is a loan to protect the lender in case you default on the mortgage – for whatever reason. In general, MI adds about $85 a month to the mortgage and is included within the mortgage payment.

The government offers a similar program, called Federal Housing Administration (FHA) mortgage insurance. This is a government program backed by taxpayers.

However, there are a couple of key benefits to going the private route. For example, Genworth Financial’s Private mortgage insurance may be cancelled when you have built up enough equity in the home and offers the lower monthly payment with a 10% or greater down payment.

Furthermore, Private MI is available on a wider variety of loan products, which is very useful when you’re considering what type of mortgage is best for you. PMI is essentially the lenders way of offsetting the risk of default on the mortgage.  The lender works with the home buyer to determine which loan product best meets their needs, and then determines the MI requirements.

Not only that, but PMI helps both seasoned and first-time homebuyers qualify for certain tax deductions. Household income and marital status affect deductions. There are some other considerations as well.  For example, households with adjusted gross incomes of $100,000 or less will be able to deduct 100% of their MI premiums. The deduction is reduced by 10% for each additional $1,000 of adjusted gross household income, phasing out after $109,000.

PMI can provide the only way to achieve the dream of homeownership if you don’t have enough cash for a large down payment. It can be a life-changer.  Not only that, but it can add a level of security in these uncertain economic times if something happens and you lose your job. Genworth’s plan offers Job Loss Protection. At least you know that you won’t lose your home as well.

This information has been contributed by Genworth Financial. I hope you enjoyed it!

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Money

Derek

AUTHOR Derek

My name is Derek, and I have my Bachelors Degree in Finance from Grand Valley State University. After graduation, I was not able to find a job that fully utilized my degree, but I still had a passion for Finance! So, I decided to focus my passion in the stock market. I studied Cash Flows, Balance Sheets, and Income Statements, put some money into the market and saw a good return on my investment. As satisfying as this was, I still felt that something was missing. I have a passion for Finance, but I also have a passion for people. If you have a willingness to learn, I will continue to teach.

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