Assume a Loan that has already fulfilled its PMI term. That’s right, a good share of Assumable Loans do not have PMI. Why, Before the downward spiral of real estate values began in 2008 many loan products did not require Private Mortgage Insurance. This makes old Assumable loan products more attractive than ever.
Plus newer loans only require PMI for the first 2-5 years. The beauty of this is, even if its current home value ratio is more that 80%, the terms of the assumable loan cannot change. Sellers & Buyers can reap this benefit when they assume the sellers existing mortgage. Most times they PMI commitment has already expired.
Newer loan products do not make room for “instant equity” to avoid PMI. This means a buyer who wants to use his own financing to purchase a home has to either put 20% down, qualify for a 80-10-10 loan product, or negotiate a higher interest rate with their lender. Over all PMI typically costs up to 1% annually. That’s $200 a month on a 200K loan.
Avoid it by assuming one that doesnt have it!