Private Mortgage Insurance

Dave doesn't think Everett's idea to get a second mortgage to avoid the private mortgage insurance is a good one.

QUESTION: Everett is on Baby Step 3b, where he saves a down payment for his house. He’s not sure he’ll have it done by the time his baby arrives. Should he buy a house and get a second mortgage so he doesn’t have to pay private mortgage insurance? Dave doesn’t think so.

ANSWER:  I would put down what I could put down on a 15 year and take the private mortgage insurance. If you took a second mortgage, it’s a crummy loan that’s so bad it would make you wish you took private mortgage insurance. Take the loan, and when you’ve paid down 20% of your balance, then get an appraisal and get the mortgage company to drop the private mortgage insurance.