Could obtaining PMI help me qualify for a larger loan?
Could obtaining PMI help me qualify for a larger loan?
Yes. Let’s say that you are a family with $42,000 annual gross income and monthly revolving debts of $800 (car payment and credit cards) and have $10,000 for a down payment and closing costs on a mortgage at 7% interest. Without PMI, the maximum price you can afford is $44,600. But with private mortgage insurance covering the lender’s risk, you can buy a house worth $62,300. PMI has afforded you 39% more house.
