Keeping Phoenix Mortgage Payments Low In Spite of PMI

With the prices of Phoenix housing having risen 48 percent over the past year, many locals don´t want to wait any longer to buy a home, even if they haven´t saved up the standard 20 percent down payment. These buyers will be able to finance their purchase with creative Phoenix mortgages, but they will also have to pay private mortgage insurance (PMI).

PMI is required by most lenders on Phoenix mortgages that cover more than 80 percent of the home´s purchase price. This protects lenders from default, but it also increases a Phoenix mortgage holder´s payments by at least $1,000 annually.

Although it is more financially sound to just save up the 20 percent down payment, many buyers are willing to pay PMI if it means purchasing a home before prices increase again. For those buyers it is important to monitor payments closely. Lenders should stop charging for PMI once the loan balance drops to 80 percent of the property´s current market value. However, many don´t stop charging until they´ve received a written request of cancellation. Sending that request on time can save Phoenix mortgage holders a lot of money.