Is paying upfront to avoid PMI a wise decision … have you done it

Discussion
1

I bought a new home by myself a few years back, putting down just 3% on a conventional loan. My loan officer mentioned I could pay upfront to avoid PMI because of my good credit and financial situation. I did the math and it seemed I would break even in 15 months compared to monthly PMI payments, so I went for it. Now, I’m wondering how common this option is, as none of my mortgage-holding friends or family had heard of such a thing. Could this be specific to new constructions or is it a widely available option

2

You can choose to pay PMI upfront if your credit score allows, which avoids the monthly charges. It’s a good option if the numbers work out. Let me know if you need more information!

3

Tali said:
You can choose to pay PMI upfront if your credit score allows, which avoids the monthly charges. It’s a good option if the numbers work out. Let me know if you need more information!

That’s exactly what I did, comparing the total cost to what I would have paid monthly. I’m just surprised not many seem to know about this option.

4

If you’ve been there for three years without refinancing, then you definitely made the right choice. It’s a common feature with conventional loans and isn’t related to the type of construction. Upfront PMI was particularly useful when interest rates were below 4%.

5

@Jamie
Thanks for the reassurance! Seems like my circle might just be a bit out of the loop on this.

6

My partner chose this option for our home, not a new construction and with a 10% down payment. Four years on, it’s clear it was one of his best decisions.

7

We opted for this with a new construction in 2018, and mathematically it made sense. However, after our home’s value nearly doubled, we refinanced in 2020 which made the upfront payment less advantageous, though no one could have predicted that market shift.

8

Decades ago, we bought our first house and took advantage of a special financing deal that let us put a second note on our home. It helped us manage the initial costs better, though I’m not sure if such options are still available.