Do Military Homeowners Pay For Private Mortgage Insurance?

Posted by Lauren Schneider on Monday, July 13th, 2020 at 7:23am.

Do Military Service Members Pay for Private Mortgage Insurance?For most homeowners, PMI is an expense that cannot be avoided. However, for military service members, PMI may not apply. If you're a military service member who would like to purchase a home, it helps to be aware of PMI and why it may not apply to you.

For informational purposes only. Always consult with a licensed mortgage or home loan professional before proceeding with any real estate transaction.

What Is PMI?

PMI stands for private mortgage insurance. PMI is a type of insurance that protects the lender from a home buyer's default. In other words, if a home buyer stops paying their mortgage payments, PMI pays their lender for the balance on the mortgage. PMI is typically a requirement on a home loan if the home buyer puts down less than 20%.

PMI is not the only kind of mortgage insurance. PMI typically applies to private loans. Other types of mortgage insurance apply to federally backed loans like FHA loans.

How Does Mortgage Insurance Work?

Home buyers pay a premium for their mortgage insurance, even though they are not the recipient in the event of a default. The premium for PMI is added to the monthly mortgage payment, which increases the amount the homeowner must pay in order to stay in their home.

Do Service Members Pay PMI?

Typically, service members do not pay PMI because most military service members apply for a VA home loan. VA loans do not require service members to pay PMI, even if they make a low down payment or no down payment at all. This is an added benefit for military service members and can make buying a home overall more affordable.

Other Ways to Save Money When Buying a Home

There are many ways to save money when buying a home. Getting a VA loan is just one of those ways. It also helps to work with a real estate professional who can negotiate a good price for the home you want to buy. A home buyer's real estate agent can also help them identify the neighborhoods with the best homes at the most affordable prices. Shopping around can help buyers save money.

It's also important to shop around for the right lender. Although many lenders may be approved to administer VA loans, different lenders may have different interest rates and fees. By looking for the right lender, buyers can potentially save money every month on their loan.

Buying a Home? Contact a Real Estate Professional

Are you a military service member buying a home sometime in the next few months? If so, now is the time to prepare. You have a lot to learn about home loans, down payments, the home buying process and more. Buying a home is complicated, but with the help of a real estate professional, you can find a home that works for your needs. Your real estate agent can help you negotiate a price that works with your budget.

It's important to work with a real estate agent who has experience helping military service members through the home-buying experience. Military service members have access to special services throughout the home buying process and also face their own unique challenges. Working with a real estate professional can make buying a home easier and less stressful.

For informational purposes only. Always consult with a licensed mortgage or home loan professional before proceeding with any real estate transaction.

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