The following is a guest post
I remember when my parents bought their first house, the house that my younger sister was born in. The house that my parents still live in. Prior to buying, we’d lived in a rented apartment over a garage that was a part of a large estate. Even though the property was over ten wide-open acres, the apartment itself was the size of a two-car garage. I have no idea how they managed to live there with a young child who was probably bouncing off the walls half the time. But it was the seventies; and I guess things were different then.
When they closed on the house, they were immensely proud, as if the house itself affirmed that they’d become the adults they always wanted to be (as if having two children wasn’t enough!).
Fast-forward a few decades (my entire lifetime), and now I’m the one looking to buy my first home along with my husband. But I feel none of the eager, youthful enthusiasm that I remember carrying my parents through the process. Instead, there are financial worries, a depressed housing market, a terrible economy and the looming worry that at any point either of us could lose our jobs.
We are lucky enough to have my parents offer to help with the down payment. But even that doesn’t meet the lender’s preferred 20%. Enter mortgage insurance – which in the end is what made buying the house a reality.
Not to be confused with mortgage life insurance (which pays off a mortgage if the homeowner dies or becomes disabled) or homeowners’ insurance (which protects homeowners from loss due to theft, fire or disasters), private mortgage insurance, or PMI, protects the lender and investor from loss, not the borrower.
My first reaction to needing to buy PMI (aside from the clutch of anxiety seizing my stomach) was that this was just another loan that would need to be paid off. But on closer examination, I understood the benefits. First of all, it’s affordable. One loan with mortgage insurance is often a lot cheaper than taking out two separate loans. There are tax benefits as premiums are tax deductable, and without it we wouldn’t have been able to close on the house.
There are no guarantees in life. And my husband and I are still anxious about the leap we’re about to take. It will be expensive. We’ll have a mortgage to look forward to for what seems like the rest of our lives. But we both hope to make this a home filled with a lot of happiness.
Oh, and my mom just called me to celebrate the final payment on their own mortgage. The last $25 had been sent off to the lender – and the house that they bought in their twenties was all their own.