Is PMI bad? When you are looking to get a mortgage PMI might be something to consider. Our founders discuss why PMI isn’t so bad and how you can put yourself in a good financial position. Find out in what case PMI might not be such a great idea and more!
Paul Apostolakis 0:00
I mean, in your opinion, is PMI a bad thing? Like, Phil from Texas; if he’s going and putting five or 10% down, and he has PMI. Should he worry about that? Like, is he putting himself in a bad position?
Salvatore Cusumano 0:10
I wouldn’t say it’s necessarily a bad thing. I mean, it’s an opportunity cost to save a lot of money.
Paul Apostolakis 0:17
Perfect. Yeah, exactly.
Salvatore Cusumano 0:20
You’re buying, let’s say, a $300,000 home, right? You’re putting 5, 10 percent down. Let’s say you put 10% down and the PMI is $48 a month, right? Like, “okay.” At $48 a month, you’re keeping 30 grand in your pocket. Okay, your payments a little higher to another $150. So, for 200 bucks a month, you’re saving 30 grand in your pocket potentially being able to do other things with that 30 grand, right? So, put it into the home and increase the value 60 grand. There’s a whole bunch of opportunity costs that you–I mean, if you look at it just square, black and white. Yeah, you put the money down to avoid the PMI. But, life isn’t black and white. So I think you got to look at it from that perspective to see what other uses do you have for that money?
Brad Weissgerber 1:11
I think it’s very situational. Like you said, it depends on–every person’s situation is different, right? If you have the money to put 20% down and be comfortable, then yeah, PMI is bad. You don’t really need to have it, right? But if you don’t have that kind of money, or you want to have the extra money, because it’s a little tight, then yeah, PMI is a good thing. Because you can leverage it.
Paul Apostolakis 1:33
Yeah, that’s exactly what it is. And I don’t think people should shy away from PMI I think they should embrace it. And you know, a lot of people are old school. Like, “I’m not gonna have PMI, no way am I going to do PMI?” Right. And when you break it down, like Sal just did. It’s like, well, bud, then give me the money or put less money down and leverage the low interest rates, because with the PMI, your interest rates still very low.