Does Rocket Mortgage require PMI?
When considering a mortgage, one of the key questions that potential borrowers often ask is whether they will be required to pay for Private Mortgage Insurance (PMI). Rocket Mortgage, a popular online mortgage lender, is no exception. In this article, we will delve into whether Rocket Mortgage requires PMI and the factors that may influence this decision.
Rocket Mortgage, a division of Quicken Loans, is known for its user-friendly online platform that simplifies the mortgage process. However, whether or not PMI is required for a Rocket Mortgage loan depends on several factors, including the borrower’s down payment amount, credit score, and the type of loan being applied for.
Firstly, it’s important to understand what PMI is. PMI is a type of insurance that protects the lender in case the borrower defaults on the loan. Typically, borrowers are required to pay for PMI when their down payment is less than 20% of the home’s purchase price. This insurance helps lenders mitigate the risk of lending money to borrowers with lower down payments.
In the case of Rocket Mortgage, the requirement for PMI largely depends on the loan-to-value (LTV) ratio. The LTV ratio is calculated by dividing the loan amount by the appraised value of the property. If the LTV ratio is greater than 80%, PMI may be required. However, Rocket Mortgage offers various loan options that can help borrowers avoid PMI or reduce the amount of PMI they need to pay.
One such option is the Rocket Mortgage Home Possible® loan, which is designed for low- to moderate-income borrowers. This loan allows borrowers to put down as little as 3% of the home’s purchase price, potentially avoiding PMI altogether. Additionally, Rocket Mortgage offers the Rocket Mortgage Refinance, which allows borrowers to refinance their existing mortgage without PMI, as long as they have at least 20% equity in their home.
Another factor that may influence whether Rocket Mortgage requires PMI is the borrower’s credit score. Generally, borrowers with higher credit scores are more likely to be approved for loans without PMI. Rocket Mortgage takes into account the borrower’s credit history, income, and other financial factors when determining the eligibility for PMI.
In conclusion, whether Rocket Mortgage requires PMI depends on various factors, including the borrower’s down payment, LTV ratio, and credit score. While PMI may be required for some borrowers, Rocket Mortgage offers various loan options and programs that can help borrowers avoid or reduce the need for PMI. It’s always a good idea to consult with a mortgage professional to determine the best loan option for your specific situation.
