When you buy a house with a down payment of less than 20 percent, you're generally required to buy private mortgage insurance for the lender. If you default, the lender is protected.
Private mortgage insurance is so unpopular that lenders are trying to come up with ways around it. Freddie Mac, a big national mortgage lender, offers several options that will reduce the cost of mortgage insurance.
"We offer a couple of ways to benefit from flexible mortgage insurance," Freddie Mac says on its Web site. "With our reduced mortgage insurance option, we've simply cut the amount of mortgage insurance required when you take out a low-down-payment loan. Our custom mortgage insurance option offers you even greater mortgage insurance savings ... with an additional fee that may be reflected in a slightly higher interest rate or additional points at closing. Either way, you'll still save more money and may also benefit from potential tax savings."
Read more about these options online at www.freddiemac.com. Click on "for homebuyers" and then "mortgage insurance."
Freddie Mac does not lend directly to home buyers but many lenders sell mortgages to Freddie Mac. If you're interested in this option, take the information to a local lender and see if he knows about it.
