Here's part 3 of a piece from Yahoo where Suze Orman offers ways to save money:
With the average price of a home climbing above $200,000, it's understandable that many home buyers don't have the full 20 percent down payment that lenders want to see. That means more home buyers are getting stuck paying "Private Mortgage Insurance," an added monthly charge that protects the lender if you ultimately can't keep up with your mortgage payments.
Traditionally, lenders would just tack on the monthly PMI as an added cost to your mortgage. More recently, the piggyback loan, where you take out a home equity line of credit to cover the difference between your down payment and the magic 20 percent lenders want to see, has become a popular way to sidestep PMI. But the problem with a piggyback is that as Federal Reserve Chairman Alan Greenspan raises the fed funds rate, the interest rates on home equity lines of credit are going up, which means your monthly payments are going to increase. That's not good.
My advice is to skip both the traditional PMI and the piggyback and instead ask your lender to roll your PMI into the cost of the mortgage; it can be the least expensive way to land a home when you have less than 20 percent to put down.
For more information on how to save on your home/mortgage, see these links:
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