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We're talking about the difference of probably less than $120/month with PMI vs no PMI. If $120 a month is a deal breaker for buying a house, I hate to say it but you can't afford it. Your property tax payments can swing more than that in year over year, especially here in Harris County/Fort Bend County with the market the way it is.
I know what I can afford. It's not an issue of me not being able to pay PMI. I'm just saying that I could have a $1600 mortgage payment on a cheaper house that includes PMI, or I could have a $1600 mortgage payment on a slightly more expensive house that doesn't include PMI. I choose the second option.
I would also suggest you talk to your lender about an 80/10/10 loan, if you have 10% down.
80% 1st mortgage.
10% 2nd mortgage.
10% down payment.
No PMI. Just a slightly higher and/or adjustable rate on the 2nd.
So, you concentrate on paying down the 2nd, and don't have to worry about having PMI cancelled.
I would also suggest you talk to your lender about an 80/10/10 loan, if you have 10% down.
80% 1st mortgage.
10% 2nd mortgage.
10% down payment.
No PMI. Just a slightly higher and/or adjustable rate on the 2nd.
So, you concentrate on paying down the 2nd, and don't have to worry about having PMI cancelled.
Ideally I don't want to go any higher than 5% down, but thanks for the info! If I ever change my mind, that might be something to consider.
I know what I can afford. It's not an issue of me not being able to pay PMI. I'm just saying that I could have a $1600 mortgage payment on a cheaper house that includes PMI, or I could have a $1600 mortgage payment on a slightly more expensive house that doesn't include PMI. I choose the second option.
How much of a difference in monthly payment would it make for you?
With the LPMI, my monthly mortgage payment would be less than what it would be with PMI. I understand that PMI doesn't last forever, but I'm concerned with right now. Someone above mentioned that I could have found a cheaper house, but I'm having problems finding what I'm looking for and having a bit more flexibility to increase the sales price would help.
If you're so concerned with right now then why buy a house at all? If you are thinking short term, then better to keep your downpayment cash liquid and rent.
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