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PMI, or private mortgage insurance, is a necessity most times. If your down payment is less than 20% of the purchase price of the home, then you’ll need to pay for this additional insurance in order to secure a loan for the home. This policy protects the lender if the borrower cannot pay the loan installments. This way, the lender knows they will not lose money in the event of default. 

Private mortgage insurance is also required if you refinance your home when it has accrued to less than 20% equity.

Here are a few other key points to remember about PMI.

Fees

The fees involved with private mortgage insurance can range based on a few factors, including the actual size of the down payment and your credit score. You can expect the cost of the insurance to be somewhere between 0.3% and 1.5% of the loan amount per year. Homebuyers can pay PMI premiums either monthly or as a large payment up front, though some policies may require the borrower to pay installments versus a lump sum.

You Can Cancel PMI

The lender will automatically cancel your PMI once the loan drops to 78% of the home’s value. For this reason, you’ll want to keep track of your payments to see how close you are to paying off your loan. When you’ve paid your loan down to 80% of the home’s original value, you may ask your lender to discontinue the insurance premium payments.

What Is The Loan-To-Value Ratio?

This ratio is the amount of mortgage debt as a percentage based on how much the home is worth. It’s calculated by the following formula:

Amount owed on the mortgage/Appraised value

If a home is worth $100,000 and the buyer owes $80,000 on the home, the loan-to-value ratio is 80%. This means the borrower can request the lender cancel the insurance.

FHA Loans Have Different Requirements

If you secure an FHA loan, they require the payment of PMI premiums for the entire life of the loan. You can’t cancel these insurance payments, but you can refinance the loan in order to get rid of the insurance. This means that you will no longer have an FHA loan.

Private mortgage insurance can be confusing, but, as a first-time homebuyer with little capital, the fees may be worth it when you’re able to secure your first home.

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Owning a condo can provide you with the best of both worlds. While you own your unit, ownership of the common areas, land and building are shared. The other members of the condo association share costs with you. Either a property management company or the board of directors is responsible for making any big decisions. 

There are a number of advantages of condo living but there are six big ones: 

1. No Outside Maintenance

Regardless of the season, there is always outside work that needs to be done. Thankfully, if you live in a condo, then someone else is responsible for mowing the grass, pruning the trees and shoveling the walks. You also won't have to worry about making any repairs to the outside structures. The condo fees that you pay monthly are designed to pay for these services. 

2. Customize Your Space

If you rent an apartment, you're usually limited in the ways you can decorate. This isn't the case when it comes to condo living. You can paint the walls to suit your tastes, hang pictures wherever you like and even renovate to create the perfect space. 

3. Access to Amenities

Many condo buildings offer amenities that aren't included in many homes or apartment buildings. Tennis courts, a gym, basketball courts and a swimming pool are just a few of the popular options. 

4. Prime Location

Living space in a major city can often be difficult to find -- not to mention expensive. Opting for condo living often provides a practical solution to this issue. You'll also be able to enjoy easy access to things like shopping, cultural events, dining, public transportation, work and more. 

5. Share Major Costs

Typically, a portion of your condo fees are earmarked for a reserve fund. This is used for major repairs like replacing the roof, renovating the exterior or repaving the parking lot. In the event that the reserve fund isn't sufficient to pay for a needed expense, you won't have to bear the cost alone. Instead, it will be equally shared among all the condo owners. 

6. Extra Security

Some condo buildings have a secure entrance, are gated or have a doorman. Having neighbors that live beside you might make you feel safer. If you travel, you won't have to worry about your home as much. 

Condo living can allow you to enjoy the freedom of homeownership without the negatives that sometimes go along with it. A local real estate agent can help you find a condo that meets your needs. 

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Whether you're about to sign on your first rental property or already possess a portfolio full of properties that are cash-flowing like crazy, you need this. Time to reframe your mindset, step above the minutiae, and get a panoramic view of the path you're choosing. 

Why Set Goals?

It's easy to get caught up in chasing shiny new investments--especially as you gain experience investing and managing properties. But chasing every fabulous deal that pops up can take you on more than a few rabbit trails that won't get you any closer to your end goal. 

• Maybe you want to semi-retire at 40 and travel the world with your family. 
• Maybe you want to build your net worth so you'll be able to unload most of your properties once you retire and reinvest into building your own dream home. 
• Maybe you want to focus on building sustainable positive month-to-month cash flow so you can pursue non-real-estate-related goals. 

You might stumble across a slew of excellent deals and solid investments that don't fully push you toward your goals. They're good. Great, even. But maybe they require more in-depth vetting of tenants than you're willing to take on right now, or a complete rehab that you don't have enough hours in the day to pull off. 

Zoom out. Secure your vision. Grab a pen. And set some goals. 

Characteristics of Great Goals

• Excellent goals are specific and measurable. You'll know beyond a shadow of a doubt when you've arrived at them. Maybe it's a certain number in terms of cash flow or net worth. Maybe it's the point at which you can quit your day job. Maybe it's something else. If you can't measure it, it's probably not specific enough. 
• The best goals are realistically achievable. Anyone can set a goal to become a billionare in the next 12 months. Unless it's realistic for you, keep dreaming about it and working toward more achievable chunks of that dream. 
• The best goals involve other people. This one might surprise you, but a team/community/network mentality is staggeringly important for real estate investors. You'll need a team you can rely on, and your long-term goals should involve deepening your network with investors, real estate agents, and other industry professionals that are rock stars in their fields. 

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