My Real Estate Blog

Conventional Mortgage- 3 Per Cent Down & No PMI!

2/13/2013
Buyers tend to focus more on finding the ideal property and in many cases do not put as much emphasis on finding the right mortgage. The house you purchase and the mortgage you use should be given equal weight and consideration. Many times buyers and their agents get so wrapped up in finding the perfect home the mortgage gets lost in the shuffle and does not get the attention it deserves. If you do some serious mortgage shopping you will find many programs available that can be a huge long term benefit, especially for first time buyers.

Citibank, and other lenders, are offering buyers a conventional mortgage product with only 3% down and no private mortgage insurance is required! PMI is a requirement for most mortgages when you do not put down at least 20%. The cost can be hundreds of dollars per month which must be paid until such time as your principal in the property represents 20% of value. 

FHA mortgages, with 3.5% down, require PMI and buyers will pay this monthly fee for many years. To put it in perspective, if you purchase a home for $250,000 with an FHA loan and put 3.5% down, the monthly PMI monthly payment would be approximately $250.00. That is $3000 per year for an expense that does not reduce your principal nor provide a tax write off.

The Citibank loan has some income limitations and your credit score must be at 640 or higher. My buyers love this product and we have closed on 6-7 properties using this mortgage since June. Another bank just started offering a similar program so if you wish to take advantage of this mortgage, or if have any other questions please email or call me at 610-291-3056. 

Mike Choplin
RE/MAX Services
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