Understanding PMI Fees: A Comprehensive Guide
Intro
Private Mortgage Insurance (PMI) is often a necessary part of obtaining a mortgage, especially for first-time home buyers. To fully grasp the impact of PMI fees, it’s crucial to first understand the concept of credit scores. A borrower's credit status significantly influences the terms of their mortgage, including the necessity and costs associated with PMI. Thus, this guide will navigate through various concepts, including credit scores, factors affecting credit status, strategies for improving credit, personalized financial product recommendations, and insights into tax preparation.
Understanding Credit Scores
What is a Credit Score?
A credit score is a numerical representation of a person's creditworthiness. It typically ranges from 300 to 850, with higher scores indicating better creditworthiness. Lenders use this score to assess the risk of lending money. A high credit score can result in favorable loan terms, while a low score may lead to higher interest rates or even loan denial.
Importance of Credit Scores
The importance of credit scores cannot be overstated. They play a crucial role in various financial decisions. A good credit score can lower the cost of borrowing, making homeownership more affordable. Moreover, it can influence the terms of insurance policies and rental agreements. Essentially, a sound credit score opens the door to better financial opportunities.
How Credit Scores are Calculated
Credit scores are calculated using multiple factors. The primary components include:
- Payment History: This accounts for about 35% of the score. Late payments can significantly lower your score.
- Credit Utilization Ratio: This measures the amount of credit you're using compared to your total available credit. Keeping this ratio below 30% is advisable.
- Length of Credit History: A longer credit history usually benefits your score. It reflects your experience with managing credit over time.
- Types of Credit Accounts: A mix of credit cards, retail accounts, and installment loans can positively impact your score.
- Recent Credit Inquiries: Each time you apply for credit, a hard inquiry is made, which can lower your score slightly.
Common Myths About Credit Scores
There are several myths surrounding credit scores. Here are a couple:
- Checking Your Own Score Hurts It: This is not true. Checking your own credit score is a soft inquiry and won’t affect it at all.
- Zero Credit Is Better Than Bad Credit: This is misleading. Lack of credit history can prevent you from obtaining favorable loans. Building credit responsibly is critical.
Factors Affecting Your Credit Status
Understanding the various factors that affect your credit status is essential for managing your PMI fees effectively.
Payment History
This is the most significant factor in your credit score. Consistently making payments on time is crucial. Missed payments can stay on your report for up to seven years.
Credit Utilization Ratio
Keeping your credit utilization low shows lenders you can manage credit responsibly. High utilization rates can signal potential risk.
Length of Credit History
A longer credit history gives lenders insight into your credit behavior. Open accounts for as long as possible while managing them well.
Types of Credit Accounts
Holding various types of credit can improve your score. Lenders often prefer seeing different types of credit, such as installment loans and revolving credit.
Recent Credit Inquiries
Too many inquiries in a short period can lower your credit score. Spread out credit applications to minimize impact.
Strategies for Improving Your Credit
Improving your credit score requires a strategic approach.
Top Tips for Raising Your Score
- Pay Your Bills on Time: Consider setting up automatic payments to avoid missing deadlines.
- Reduce Outstanding Debts: Focus on paying down high-interest credit cards first.
- Limit New Applications: Avoid opening multiple new accounts at once.
Debt Management Techniques
Consider methods like the snowball or avalanche technique to pay off debts. The snowball method focuses on smallest debts first for quick wins, while the avalanche method prioritizes high-interest debts.
Importance of Regular Credit Report Checks
Regularly checking your credit report ensures accuracy. You can identify any fraudulent activities or errors that may hurt your score.
How to Deal with Negative Items on Your Report
Dispute any inaccuracies directly with credit bureaus. For legitimate negative items, demonstrate good credit behavior over time to offset their impact.
Personalized Recommendations for Financial Products
Finding the best financial products correlates with your credit standing.
Overview of Recommended Credit Cards
Choose cards that match your credit profile. Secured credit cards can be beneficial for those rebuilding their status.
Best Loans for Different Financial Situations
Consider VA loans or FHA loans if eligible. These options sometimes have lower PMI requirements.
How to Choose the Right Financial Product
Assess your financial needs. Look for products that offer favorable terms relevant to your situation.
Tools for Comparing Offers
Utilize comparison websites to evaluate different loans and credit products. They can help highlight discrepancies in terms and fees.
Tax Preparation and Filing Insights
Managing taxes effectively also contributes to a healthy financial profile.
Importance of Tax Compliance for Credit
Keep your financial records tidy. Lenders favor applicants with a clean tax history.
Tips for Efficient Tax Preparation
Begin collecting documents early. Apps for tax tracking can simplify the process.
Understanding Deductions and Credits
Familiarize yourself with available deductions. They can lower taxable income, which might affect future borrowing.
Common Tax Mistakes to Avoid
Ensure all information is accurate on your return. Minor errors can lead to significant issues with the IRS.
By understanding credit scores and their impact on PMI fees, borrowers can make more informed decisions and create a pathway to more affordable homeownership.
Defining PMI Fees
Defining PMI fees is crucial for understanding the broader concept of Private Mortgage Insurance. PMI fees represent the costs that borrowers must incur when they cannot provide a 20% down payment. This section aims to provide clarity on the various aspects of PMI fees. Knowing these factors helps borrowers make informed decisions about their loan options, ultimately impacting their financial stability and long-term homeownership experience.
What Is Private Mortgage Insurance?
Private Mortgage Insurance, commonly known as PMI, is a type of insurance that lenders require from borrowers who do not have a substantial down payment. The necessity of this insurance arises because the risk for lenders increases when borrowers contribute less than 20% of the home's purchase price. PMI acts as a safeguard for lenders, covering a portion of their potential losses in the event of borrower default.
Specifically, PMI does not protect the borrower; rather, it protects the lender's interests. This distinction is critical for first-time homebuyers or those with limited savings who may not clearly understand PMI’s implications. The premiums are typically added to your monthly mortgage payments and can increase the total monthly expenditure significantly.
Purpose and Function of PMI Fees
The primary purpose of PMI fees is to reduce the financial risk to lenders when they approve loans for buyers with low down payments. The function of PMI can be broken down into several key aspects:
- Risk Mitigation: PMI provides peace of mind for lenders. They can lend to borrowers who may not otherwise qualify without the security of PMI.
- Access to Homeownership: By allowing borrowers to put down less than 20%, PMI opens doors for many first-time buyers, making homeownership more accessible.
- Affordability Considerations: While PMI adds to monthly costs, it sometimes benefits borrowers by allowing them to purchase a home sooner than if they were to wait and save for a larger down payment.
The Necessity of PMI Fees
When considering the journey of home ownership, understanding Private Mortgage Insurance (PMI) fees is crucial. PMI serves a pivotal role in facilitating access to mortgage loans for borrowers who may not have a 20% down payment. These fees carry both immediate and long-term implications for borrowers. Therefore, comprehending the necessity of PMI can greatly influence financial planning and decision-making in the home-buying process.
When Are PMI Fees Required?
PMI fees come into play when a borrower opts for a conventional loan and makes a down payment of less than 20% of the home's value. Lenders perceive low down payments as higher risk, making PMI a safety net for them. In essence, PMI protects the lender against potential loss if the borrower defaults on the loan.
It is important to note that PMI is not mandated for government-backed loans, such as FHA or VA loans, which have their own insurance requirements. However, many first-time homebuyers, who typically have smaller savings, find themselves relying on conventional loans and encountering PMI fees. Therefore, understanding the scenarios that trigger these fees assists in navigating the loan landscape effectively.
Risk Assessment from Lenders’ Perspective
From the vantage point of lenders, PMI fees serve as a calculated response to risk management. By requiring PMI, lenders can mitigate the potential financial fallout that may occur if a borrower defaults. This is especially relevant in volatile markets where property values can fluctuate unpredictably.
The process of underwriting loans involves an assessment of a borrower's creditworthiness, income stability, and debt-to-income ratio, among other factors. In cases where the borrower presents a high-risk profile due to lower credit scores or insufficient down payments, PMI becomes essential. Essentially, it provides reassurance to lenders that their investment is somewhat safeguarded, thus facilitating loan approval where otherwise it may be denied.
Furthermore, PMI also indirectly benefits borrowers by enabling them to enter the housing market sooner, rather than waiting to save for a larger down payment. However, it is crucial for borrowers to weigh the advantages against the added financial strain PMI fees can impose on their monthly budgets.
Understanding when PMI fees are needed and why lenders require them empowers borrowers to make informed financial decisions.
Types of PMI Fees
Understanding the different types of PMI fees is crucial for borrowers. This knowledge helps in making informed decisions about mortgage options. The type of PMI can influence the overall cost of homeownership and impact monthly budgets. There are primarily two types of PMI fees: Borrower-Paid Mortgage Insurance and Lender-Paid Mortgage Insurance. Each type has its own characteristics, advantages, and potential drawbacks that can affect the homebuying process.
Borrower-Paid Mortgage Insurance
Borrower-Paid Mortgage Insurance (BPMI) is a common form of PMI. It is paid directly by the borrower, which means that homebuyers can include it in their monthly mortgage payments. The primary benefit of BPMI is its transparency. Borrowers know exactly what they are paying for and can plan their budgets accordingly.
Typically, BPMI is required when the down payment is less than 20% of the home's purchase price. This insurance protects the lender in case of default. The cost of BPMI varies based on several factors. These factors include the size of the loan, the borrower’s credit score, and the level of down payment. In some cases, BPMI can be slightly less expensive than Lender-Paid Mortgage Insurance, but it remains a fixed outflow until certain conditions are met.
Key Points About Borrower-Paid Mortgage Insurance:
- Monthly Payments: BPMI often comes as a monthly charge, adding to the total monthly mortgage payment.
- Use and Cancellation: Borrowers can request to cancel BPMI once they attain 20% equity in the home, which can save money long term.
- Comparison with LPMI: It is essential to compare BPMI to other options, such as Lender-Paid PMI, to evaluate the best financial choice.
Lender-Paid Mortgage Insurance
Lender-Paid Mortgage Insurance (LPMI) is an alternative to BPMI that some lenders offer. In this setup, the lender pays for the PMI but typically charges a higher interest rate to the borrower. This can seem attractive initially, as it reduces the upfront costs or monthly fees associated with mortgage insurance. However, one should consider the long-term implications.
LPMI can create a misconception that it is a more economical option since it lowers monthly payable amounts. However, over time, a higher interest rate can lead to greater overall costs, especially if a borrower stays in the home long term.
Key Points About Lender-Paid Mortgage Insurance:
- No Separate Payments: The borrower does not see a line item for PMI; it's embedded in the loan's interest rate.
- Cost Recovery: If market rates decrease and borrowers refinance, they cannot eliminate LPMI as easily as BPMI.
- Equity Considerations: Borrowers may find that there is less flexibility in canceling PMI since it's tied to the loan interest.
Understanding these types allows borrowers to make strategic decisions about how to manage their mortgage payments. Balancing immediate affordability versus long-term financial impact is important for any homebuyer.
Calculating PMI Fees
Understanding how PMI fees are calculated is crucial for borrowers. This knowledge helps in budgeting accurately for monthly payments and maximizing homeownership affordability. PMI fees can vary widely, influenced by multiple factors including loan amounts and personal credit history. By grasping these calculations, potential homeowners are better equipped to make informed decisions.
How Is PMI Calculated?
PMI is commonly calculated as a percentage of the original loan amount. This percentage typically ranges from 0.3% to 1.5%, depending on various factors. The following steps outline the general process to calculate PMI:
- Determine the Loan Amount: Start with the total amount you will borrow. For instance, if you are borrowing $200,000.
- Identify the PMI Rate: This rate is often determined by your lender based on your credit score and down payment ratio. A borrower with a higher credit score may find that their PMI rate is on the lower end of the spectrum.
- Apply the Formula: Multiply the loan amount by the PMI rate.
For example, if the PMI rate is 0.5%, the calculation would look like this:
[
PMI ext Fee = Loan ext Amount \times PMI ext Rate
]
For a loan of $200,000, the PMI fee would be $1,000 annually, or about $83.33 monthly.
Factors Influencing PMI Rate
Several elements impact the rate of PMI. Understanding these can help borrowers anticipate costs and potentially lower them. Here are the main factors:
- Down Payment Size: A smaller down payment often results in higher PMI rates. This is because lenders perceive greater risk with less equity.
- Loan Type: Different loan programs have varying PMI structures. For example, conventional loans usually have distinct calculations compared to government-backed loans.
- Credit Score: A higher credit score indicates lower risk to lenders. Consequently, individuals with better scores might benefit from lower PMI rates.
- Loan-to-Value (LTV) Ratio: The relationship between the loan amount and the appraised value of the home is crucial. A lower LTV ratio (more home equity) can result in lower PMI costs.
Understanding these factors not only aids in budgeting but also empowers borrowers to negotiate and seek better terms with their lenders.
By knowing how PMI is calculated and the elements that influence its rate, homebuyers can strategize their financing plans. This essential knowledge allows for informed decisions, ultimately improving their financial outcomes.
PMI Fee Structure
Understanding the PMI fee structure is crucial for borrowers, as it influences monthly payments and overall mortgage costs. This section clarifies how PMI fees are structured and the implications for homebuyers. By grasping this structure, consumers can make better financial choices, potentially saving money in the long term.
Monthly vs.
Single Premium PMI
PMI fees can be categorized into two main types: monthly premium PMI and single premium PMI. Each has distinct advantages and disadvantages, making them suited for different financial situations.
Monthly premium PMI is added to the borrower's monthly mortgage payment. This option is often popular among those who want to keep their upfront costs lower. It allows borrowers to budget monthly as they pay off their mortgage. However, over time, this monthly addition can accumulate, leading to more significant costs.
Single premium PMI, conversely, requires the borrower to pay the entire PMI amount upfront at closing. This option can lead to savings since the borrower won’t pay PMI with monthly payments. It can be advantageous for those with enough savings to cover this cost upfront. However, this structure can be challenging for first-time buyers who may have limited assets available at the closing.
When selecting between these options, consider the overall loan term and how long you expect to remain in the home.
Impact of Loan Amount on PMI Costs
The loan amount significantly influences PMI costs, as these fees are typically calculated as a percentage of the loan. Factors affecting this percentage include the size of the mortgage, the down payment, and the credit score.
For example, a higher loan amount generally results in higher PMI costs. Conversely, a borrower who can make a larger down payment will often pay less in PMI. Additionally, a stronger credit score may lead to better PMI rates.
Key Takeaway: Reducing the loan amount through a larger down payment or improving your credit score can lower PMI costs.
Understanding these dynamics is essential for borrowers working to enhance their financial health and make informed decisions. A clear grasp of PMI fee structure ultimately empowers borrowers to navigate their mortgage options effectively.
Implications of PMI Fees
Understanding the implications of PMI fees is crucial for borrowers navigating the complex landscape of home financing. The fees, while offering protection to lenders, bring financial considerations that directly affect homeowners. This section highlights key elements of PMI fees, focusing on budgeting strategies and long-term financial impact. It sheds light on how these fees may influence overall homeownership costs and sheds light on crucial decision-making aspects for first-time buyers.
Monthly Budget Considerations
When incorporating PMI into a budget, it’s essential to assess how its cost fits within overall monthly expenses. PMI fees do not contribute to equity in the home, but they are nonetheless a requisite for many borrowers. Clients should think about the following elements when planning their budgets:
- PMI Payment Type: Monthly payments can increase monthly costs. If a borrower uses Borrower-Paid Mortgage Insurance, this monthly payment is a fixed cost until the PMI is eliminated.
- Impact on Affordability: PMI might stretch a monthly budget. For those already maximizing their mortgage payment, adding PMI can limit financial flexibility.
- Income and Other Debt: Evaluate other financial obligations, like student loans or car payments. A comprehensive understanding of how PMI interacts with existing debts is vital.
PMI can also be seen as a hurdle for some first-time homebuyers. Having to account for these extra fees may lead to tough choices on what to prioritize in a budget. This is why examining all factors associated with PMI is essential.
Long-Term Financial Impact
The long-term implications of PMI fees are often overlooked but can be significant. As borrowers weigh these costs, they should consider:
- Total Cost Over Time: PMI fees can accumulate into a considerable sum over the years. Borrowers need to calculate these fees alongside their mortgage to fully grasp the long-term expense.
- Equity Growth: PMI does not build any equity in a home. This means increased time before reaching the 20% equity threshold where PMI can typically be removed.
- Potential for Refinancing: In the future, refinancing options may lead to a decrease in PMI fees or even elimination altogether, depending on the borrower’s equity position and market conditions.
The longer PMI fees are in place, the more they can detract from a homeowner's total wealth accumulation and financial goals.
Eliminating PMI Fees
Eliminating PMI fees can be a crucial aspect for many homebuyers. This section explores the key strategies to remove these additional costs, thus enhancing financial well-being. PMI fees can sometimes seem like an unavoidable expense, but understanding how to eliminate or reduce them can lead to substantial savings in the long run.
Reaching % Equity
One of the straightforward ways to eliminate PMI fees is by achieving at least 20% equity in your home. Equity refers to the portion of the home that you truly own. To calculate equity, take the current value of your home and subtract the outstanding mortgage balance. When your equity reaches or exceeds 20%, you are usually eligible to remove PMI payments.
There are several approaches to reach this equity goal:
- Increase Home Value: Improvements on the property, such as remodeling kitchens or bathrooms, can increase home value. A higher home value directly raises your equity percentage.
- Make Extra Payments: Paying down your mortgage principal faster through extra payments can help in reaching the 20% equity threshold sooner.
- Market Appreciation: Sometimes the housing market appreciates faster than expected. Staying informed about the market can help you recognize when your property value has increased sufficiently.
It is important to note that once you believe you have reached the 20% equity mark, you should contact your lender to request a PMI cancellation. Lenders typically require a home appraisal to confirm the new equity amount.
Refinancing Options
Refinancing is another method to eliminate PMI fees. It involves taking out a new mortgage, typically with better terms, to replace the existing one. This can be particularly effective if your home has appreciated in value or if interest rates have dropped since your original mortgage.
When refinancing, a few key points are essential:
- Appraisal Requirement: Lenders may require a new appraisal to confirm the current home value. If your home's value has risen significantly, you may qualify for a loan with a lower loan-to-value ratio, potentially allowing for PMI removal.
- Cost vs. Benefit Analysis: Consider if the costs associated with refinancing, including closing costs, outweigh the benefits of saving on PMI. You may want to run some calculations to see how long it will take to break even based on your new monthly payment.
- Loan Type Considerations: Certain loans, especially those with government backing, may have different PMI implications and needs. Make sure to explore varying options when refinancing.
Generally, eliminating PMI can lead to better monthly budgets and enhance overall financial stability. Understanding these steps is crucial for all potential homeowners.
Alternatives to PMI Fees
Exploring alternatives to PMI fees is increasingly relevant for borrowers who wish to save on additional costs during the homebuying process. Understanding these options can empower borrowers to make better financial choices. This section discusses two primary alternatives: government-backed loans and using a higher down payment. Both strategies can significantly reduce or even eliminate the need for PMI, making them worth considering.
Government-Backed Loans
Government-backed loans, such as those offered through the Federal Housing Administration (FHA) or the Department of Veterans Affairs (VA), present a viable alternative to traditional mortgages with PMI fees. One attractive aspect of these loans is that they often come with lower down payment requirements and more flexible credit score criteria.
Benefits of Government-Backed Loans:
- Lower Down Payments: FHA loans allow down payments as low as 3.5%.
- No PMI: VA loans, specifically, do not require PMI, which can be a significant financial advantage.
- Flexible Qualifications: Many borrowers find it easier to qualify for government-backed loans due to lenient credit requirements.
However, despite the benefits, these loans may also involve upfront mortgage insurance premiums or funding fees that have to be considered. Borrowers should carefully evaluate these trade-offs.
Using a Higher Down Payment
Another effective strategy to avoid PMI fees is providing a higher down payment. By increasing the down payment to at least 20% of the home's price, borrowers can typically eliminate the need for PMI altogether.
Considerations for a Higher Down Payment:
- Immediate Cost: Providing a larger down payment requires more upfront financial investment.
- Equity Benefits: A higher down payment results in immediate equity in the home, which can be beneficial for future financial decisions.
- Lower Monthly Payments: With less money borrowed, monthly mortgage payments will be lower, easing the monthly budget concerns.
However, not everyone may have sufficient funds saved up for a higher down payment. Thus, this option may not be feasible for all first-time buyers or novices in the housing market. Nevertheless, evaluating the capacity to provide a larger down payment can lead to a significant reduction in overall mortgage costs over the long term.
Borrowers should weigh these alternatives carefully to determine which option best fits their financial situation and goals.
State-Specific PMI Considerations
Understanding the intricacies of PMI fees involves not only the broader elements but also state-specific factors. Each state may impose unique regulations regarding private mortgage insurance. These variations can influence the cost and requirement of PMI. Borrowers need to be aware of how state laws can impact their financial strategies regarding PMI.
Variability Across States
The regulations surrounding PMI can vary significantly from one state to another. Some states have specific laws that dictate how PMI is applied, while others follow more general guidelines. For instance, states like California may have stringent consumer protections, impacting PMI rates and disclosure requirements. In contrast, states with less regulation might offer more flexibility for lenders, potentially leading to higher PMI fees for borrowers.
Key aspects to consider include:
- State Regulations: Understand the local laws that govern PMI. Familiarize yourself with what is required in your state, such as disclosure statements and maximum allowable rates.
- Insurance Companies: The pool of available insurance providers can differ by state. Some companies might be more favorable in certain regions, offering lower rates or better service.
- Legal Recourses: If issues arise related to PMI fees, local laws will dictate the options available for recourse. Knowing these can protect borrowers' rights.
Impact of Local Housing Market Trends
Local housing market conditions can significantly influence PMI costs. In areas where home values are rising quickly, lenders may view this as reduced risk. Consequently, PMI fees may be adjusted downward. Conversely, in markets experiencing stagnation or decline, lenders might impose higher PMI fees to mitigate their risks.
Factors affecting this include:
- Home Price Trends: An increasing trend in home prices often translates to lower PMI rates, as lenders see less risk in the investment.
- Local Economic Conditions: Areas with strong employment rates and economic growth typically have more stable real estate markets, leading to favorable PMI calculations.
- Demand and Supply Dynamics: High demand paired with limited housing supply can drive prices up, further affecting PMI rates and requirements.
The interplay between state-specific factors and local market trends underscores the need for potential homeowners to conduct thorough research tailored to their geographic locations.
In summary, understanding state-specific PMI considerations is critical for borrowers at any stage of homebuying. It aids in anticipating possible fees and legal requirements while empowering borrowers to make informed decisions.
The Role of PMI in the Homebuying Process
Understanding the role of Private Mortgage Insurance (PMI) in the homebuying process is crucial for any prospective buyer. PMI acts as a safety net for lenders, allowing buyers to obtain mortgages with lower down payments. While this may facilitate homeownership for individuals who lack substantial savings, it also introduces additional costs that need to be factored into the overall budgeting process. Buyers must approach PMI with an informed perspective, as it influences their financial landscape significantly.
PMI fees indicate lenders' assessments of risk and serve a pivotal role in mortgage agreements. They are particularly relevant for borrowers who cannot provide a 20% down payment, thereby making PMI an essential topic in discussions surrounding home purchasing. Understanding this component helps buyers navigate their options and foresees the financial implications involved in homeownership.
PMI Disclosure Requirements
Buyers should be aware of the PMI disclosure requirements laid out by lenders. These guidelines mandate that lenders provide clear information about the details of PMI fees, including how these will be calculated and the terms of cancellation. This transparency is intended to protect consumers, ensuring they understand the ongoing costs associated with their loans.
Key aspects of PMI disclosure include:
- Cost Estimates: Lenders must provide estimated PMI costs in the loan estimate documents.
- Payment Schedule: Information about the scheduled payments—whether monthly or upfront—must be clearly disclosed.
- Cancellation Policies: Borrowers must be informed about when and how they can cancel PMI once they've achieved a certain level of equity in their homes.
Understanding these requirements enables buyers to make informed decisions. It also prepares them for discussions regarding PMI and reinforces their ability to negotiate effectively.
Negotiating PMI Terms
Negotiating PMI terms can be one of the less-discussed yet critical components of the homebuying process. Buyers should not assume that PMI fees are non-negotiable. Understanding and negotiating these terms can save thousands over the course of the loan.
Considerations during negotiation include:
- Loan Type: Different loan types may have varying PMI terms. Be aware of these differences.
- Down Payment: A higher down payment can sometimes lead to reduced PMI rates.
- Credit Score: A strong credit score may provide leverage in negotiating lower rates.
- Comparing Lenders: Not all lenders offer the same PMI terms. Buyers should compare multiple lenders to find optimal terms.
Navigating PMI negotiation with proper knowledge and tools allows borrowers to wield more power during the loan process, leading to better financial outcomes. Ultimately, how PMI is structured can influence not just monthly payments, but also the long-term financial health of the borrower.
