Finally, you have enough money saved up to put a down payment on a home. Congratulations! Now it's time to start looking for a mortgage. But there's one more thing you need to consider: private mortgage insurance, or PMI.

PMI protects the lender if you can't pay back your mortgage. It's required if you don't have a 20% down payment, and it can add hundreds of dollars to your monthly mortgage payment.

Do you need private mortgage insurance?

You must get PMI if your down payment is less than 20% of the purchase price. For example, if you buy a house for $300,000, you'll need at least $60,000 for a down payment.

Ways to Avoid PMI:

If you're a doctor looking for a loan, you may wonder how to avoid paying private mortgage insurance (PMI). Here are some strategies for that.

One way to avoid PMI is to put down at least 20% when you purchase your home. If you can swing it, this is the best option, as it will save you a lot of money in the long run. Another way to avoid PMI is to get a physician loan. These are loans for doctors which are specifically designed and often have lower interest rates and down payment requirements.

If you cannot put down 20% or get a physician loan, there are still options for avoiding PMI. You can ask your lender about lender-paid mortgage insurance (LPMI). With this option, the lender pays your PMI for you and raises your interest rate slightly to cover the cost.

After you have your loan, there are a few things you can do to save money. The first is to pay attention to your escrow account. This account covers property taxes and insurance due during the year. You should pay at least 80% of the assessed value of the tax bill and insurance premium. If you don’t, the lender will start charging you for the shortfall. You can also see if you can lock in an interest rate with a fixed-rate mortgage.

How to Assess Your Suitability for a Physician Mortgage

You've probably heard of physician mortgages, but you may not know exactly what they are or whether one is right for you. Here's a quick low-down on physician loans and how to decide if one is right for you.

Physician loans are special loans available to doctors and other medical professionals. They typically have lower interest rates and more favorable terms than regular mortgages, making them a good option for doctors looking to buy a home.

However, before applying for a physician loan, you should consider a few things.

First, ensure you understand the terms of the loan and what it will mean for your finances in the long run.
Second, consider whether you need the extra money that a physician loan can provide. The extra money might be helpful if you want to buy a home.
However, a physician loan might not be the best option if you already have other debt and don't need the cash.

Conclusion

As a doctor, you might be familiar with private mortgage insurance (PMI). The insurance provided by PMI guards the lender against your loan default. Occasionally, PMI is required if you put less than 20% down on your home. While PMI can be good for some borrowers, it’s not always necessary.

At LeverageRX, the cost of PMI ranges between less than 1% and 5% of the loan, depending on the lender. So it's no longer a drawback, and you can confidently proceed with your new home purchase.

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