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Whitaker-Myers Wealth Managers is an SEC-registered investment adviser firm. The information presented is for educational purposes only and intended for a broad audience. The information does not intend to make an offer or solicitation to sell or purchase any specific securities, investments, or investment strategies. Investments involve risk and are not guaranteed. Whitaker-Myers Wealth Managers reasonably believes that this marketing does not include any false or misleading statements or omissions of facts regarding services, investment, or client experience. Whitaker-Myers Wealth Managers has a reasonable belief that the content will not cause an untrue or misleading implication regarding the adviser’s services, investments, or client experiences. Please refer to the firm’s ADV Part 2A for material risks disclosures.

​

Past performance of specific investment advice should not be relied upon without knowledge of certain circumstances of market events, the nature and timing of the investments, and relevant constraints of the investment. Whitaker-Myers Wealth Managers has presented information in a fair and balanced manner.

​

Copyright (c) 2023 Clearnomics, Inc. and Whitaker-Myers Wealth Managers, LTD. All rights reserved. The information contained herein has been obtained from sources believed to be reliable, but is not necessarily complete and its accuracy cannot be guaranteed. No representation or warranty, express or implied, is made as to the fairness, accuracy, completeness, or correctness of the information and opinions contained herein. The views and the other information provided are subject to change without notice. All reports posted on or via www.clearnomics.com or any affiliated websites, applications, or services are issued without regard to the specific investment objectives, financial situation, or particular needs of any specific recipient and are not to be construed as a solicitation or an offer to buy or sell any securities or related financial instruments. Past performance is not necessarily a guide to future results. Company fundamentals and earnings may be mentioned occasionally, but should not be construed as a recommendation to buy, sell, or hold the company's stock. Predictions, forecasts, and estimates for any and all markets should not be construed as recommendations to buy, sell, or hold any security--including mutual funds, futures contracts, and exchange traded funds, or any similar instruments. The text, images, and other materials contained or displayed in this report are proprietary to Clearnomics, Inc. and constitute valuable intellectual property. All unauthorized reproduction or other use of material from Clearnomics, Inc. shall be deemed willful infringement(s) of this copyright and other proprietary and intellectual property rights, including but not limited to, rights of privacy. Clearnomics, Inc. expressly reserves all rights in connection with its intellectual property, including without limitation the right to block the transfer of its products and services and/or to track usage thereof, through electronic tracking technology, and all other lawful means, now known or hereafter devised. Clearnomics, Inc. reserves the right, without further notice, to pursue to the fullest extent allowed by the law any and all criminal and civil remedies for the violation of its rights.

All You Need to Know about PMI

Writer: Clay ReynoldsClay Reynolds
Mar 173 min read

Private Mortgage Insurance

Saving for a house is a significant milestone that involves many moving parts and key factors to consider throughout the process. One of these factors that should be addressed is Private Mortgage Insurance (PMI). 

 

History of PMI

Private Mortgage Insurance (PMI) was introduced in the 1950s to reduce the risk for mortgage lenders and make homeownership more accessible for borrowers who could not afford to put 20% down. This widened the entry point for homeownership, as before PMI, larger downpayments were required to secure a mortgage. This insurance protects the lender if the borrower defaults on the loan, ultimately allowing the lenders to offer loans to a broader range of people.

 

Types of PMI

BPMI

The most common type of PMI is borrower-paid PMI or BPMI. This structure includes monthly premiums with your mortgage payment. The lender selects the insurance company; the cost typically ranges from 0.2% to 2% of the loan amount annually. The price is dependent on the borrower's risk factors, such as credit score, loan-to-value ratio, and loan type.

 

LPMI

Lender-paid mortgage insurance (LPMI) is another type of PMI where, unlike BPMI, the lender pays the PMI premium instead of the borrower. However, this typically results in higher interest rates on the mortgage. Since the PMI cost is incorporated into the interest rate, the borrower doesn't make a separate PMI payment. The process for removing LPMI differs significantly from BPMI. To remove LPMI, the borrower would usually need to refinance the loan, as the PMI cost is embedded in the interest rate.

 

Lump-Sum PMI

Single-premium mortgage insurance is a lump-sum PMI paid at closing or financed into the loan balance upfront. This structure covers the entire cost of PMI for the life of the loan. Because this cost is a one-time upfront, it is non-refundable. One thing to be aware of is that if you sell or refinance your home, you will not get a refund for the premium you paid. The lack of flexibility that comes with single-premium mortgage insurance should be assessed when looking at your situation.

 

Removing PMI

Under the Homeowner Protection Act, lenders must automatically cancel PMI when the loan balance reaches 78% of the original home value. You must be current on your mortgage payments to be eligible for the automatic removal. Refinancing into a new loan without PMI may be an option if your home has appreciated and your equity is at least 20%. For individuals who have a second loan (e.g., HELOC or piggyback loan), your ability to remove PMI can be a bit more complex.

 

We recommend waiting to buy a house until you have saved up the entire 20% downpayment. As we have seen, PMO is a cost to you and only protects the bank, If you are already in a mortgage, work on paying down your principle and removing the PMI as soon as possible.

 

Help with understanding

Buying a home has a lot of moving pieces and parts. Knowing how ready you are can be tricky, and knowing the best strategy can help save you money. If you are planning to buy a home soon and want to get a clearer understanding of how that will affect your finances, schedule a meeting with one of our Financial Advisors if you have any questions about your financial situation.

 
 

Whitaker-Myers Wealth Managers is an SEC-registered investment adviser firm. The information presented is for educational purposes only and intended for a broad audience. The information does not intend to make an offer or solicitation to sell or purchase any specific securities, investments, or investment strategies. Investments involve risk and are not guaranteed. Whitaker-Myers Wealth Managers reasonably believes that this marketing does not include any false or misleading statements or omissions of facts regarding services, investment, or client experience. Whitaker-Myers Wealth Managers has a reasonable belief that the content will not cause an untrue or misleading implication regarding the adviser’s services, investments, or client experiences. Please refer to the firm’s ADV Part 2A for material risks disclosures.

​

Past performance of specific investment advice should not be relied upon without knowledge of certain circumstances of market events, the nature and timing of the investments, and relevant constraints of the investment. Whitaker-Myers Wealth Managers has presented information in a fair and balanced manner.

​

Copyright (c) 2023 Clearnomics, Inc. and Whitaker-Myers Wealth Managers, LTD. All rights reserved. The information contained herein has been obtained from sources believed to be reliable, but is not necessarily complete and its accuracy cannot be guaranteed. No representation or warranty, express or implied, is made as to the fairness, accuracy, completeness, or correctness of the information and opinions contained herein. The views and the other information provided are subject to change without notice. All reports posted on or via www.clearnomics.com or any affiliated websites, applications, or services are issued without regard to the specific investment objectives, financial situation, or particular needs of any specific recipient and are not to be construed as a solicitation or an offer to buy or sell any securities or related financial instruments. Past performance is not necessarily a guide to future results. Company fundamentals and earnings may be mentioned occasionally, but should not be construed as a recommendation to buy, sell, or hold the company's stock. Predictions, forecasts, and estimates for any and all markets should not be construed as recommendations to buy, sell, or hold any security--including mutual funds, futures contracts, and exchange traded funds, or any similar instruments. The text, images, and other materials contained or displayed in this report are proprietary to Clearnomics, Inc. and constitute valuable intellectual property. All unauthorized reproduction or other use of material from Clearnomics, Inc. shall be deemed willful infringement(s) of this copyright and other proprietary and intellectual property rights, including but not limited to, rights of privacy. Clearnomics, Inc. expressly reserves all rights in connection with its intellectual property, including without limitation the right to block the transfer of its products and services and/or to track usage thereof, through electronic tracking technology, and all other lawful means, now known or hereafter devised. Clearnomics, Inc. reserves the right, without further notice, to pursue to the fullest extent allowed by the law any and all criminal and civil remedies for the violation of its rights.

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