Flower Mound Real Estate and Mortgage Company News | PMI Vs. Second Mortgage

Typically when a borrower has less than a 20% down payment for a home the bank will make the borrower purchase PMI to insure against any loss in the even of default.  Most borrowers have opted instead for purchasing a second mortgage to cover the difference in the cash and having to come up with 20% down.  In the past interest on second mortgages were tax deductable and PMI was not.  Most borrowers liked this because at least they believed their money was going towards equity and not an insurance policy for the bank.

No days PMI has gained in popularity because of its new tax deductibility, however most borrowers still opt for the usually cheaper 2nd mortgage.

With the recent increase in foreclosures PMI companies have really dodged the bullet.  It is really awesome to think about the liability that would be on these PMI companies.

For more information on this subject see “PMI Insurers May Owe Thanks To Piggy-Back Mortgages.”

Ray Rice
Broker / Owner
Rice Capital Mortgage
Serving the Dallas, Flower Mound, Grapevine, Southlake and Keller Communities.

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