Avoid PMI - how to avoid PMI?

How to avoid PMI? There are a few ways to avoid PMI or Private Mortgage Insurance requirement. Below are discussions showing how to avoid PMI.

How to avoid PMI #1: buy your home with a piggyback mortgage

To avoid PMI, you can buy your home with a piggyback mortgage such as the 80/10/10 mortgage or a 80/15/5 mortgage. Depending on the lender of your mortgage, you may be able to put down the equity portion of your mortgage loan as down payment. This will help you avoid the PMI. Some people wonder if getting a piggyback mortgage is the right thing to do. The answer is, for some people, getting a piggyback mortgage is a good thing and can help them buy a home and avoid PMI which they could not have otherwise.

How to avoid PMI #2: pay down your mortgage

If you pay down your mortgage substantially so that your loan to value ratio is below about 80% then you would likely avoid PMI. However, most people do not have this luxury of paying down their mortgage substantially. But if you can make extra payments towards your mortgage, it can help you avoid PMI in the near future.

How to avoid PMI #3: Watch your loan to value ratio of your home

When the loan to value ratio of your home is low, your requirement for PMI drops. So, the best way of how to avoid PMI is to watch the loan to value ratio of your home. As the market value of your home rises, the loan to value ratio of your home will fall. When your loan to value ratio is small enough you will avoid the PMI.