PMI Calculator

PMI Calculator

 

What is Private Mortgage Insurance?

 

 

What is the difference between Private Mortgage Insurance (PMI) and FHA loan Insurance?

 

 

How is Private Mortgage Insurance- PMI added?

 

 

How much is my Mortgage Insurance?

 

 

 


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Private Mortgage Insurance

Private mortgage insurance is a type of insurance that helps protect the mortgage company (the insurance does not protect the borrower!) against losses due to foreclosure. This protection is provided by private mortgage insurance companies and allows mortgage companies to accept lower down payments than would normally be allowed.

Private mortgage insurance also enables mortgage companies to grant loans that would otherwise be considered too risky to be purchased by third party investors like the Federal National Mortgage Association (FNMA) and the Federal Home Loan Mortgage Corporation (FHLMC). The ability to sell loans to these investors is critical to maintaining mortgage market liquidity, which in turn, allows mortgage companies to continue originating new loans.

 

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PMI vs FHA MIP

Although the insurance protection concept is similar, there are differences between private mortgage insurance and FHA mortgage insurance. FHA insurance is a government-administered mortgage insurance program that does have certain restrictions. FHA has maximum regional loan limits that are lower than those with private mortgage insurance. FHA may be more expensive, take longer to receive approval, and have fewer payment plan options. FHA insurance lasts for the life of the loan, unlike private mortgage insurance which is cancelable in most circumstances. FHA is a good choice for some borrowers with credit history problems that might need special assistance.

 

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Calculating the PMI

When you purchased your house your lender most likely added mortgage insurance, also called Private Mortgage Insurance (PMI), to your monthly payment unless you made at least a 20% down payment. This payment is based on the original mortgage amount and is paid as part of your monthly mortgage payment until you show that your house has increased in value, including additions and improvements to the point that your loan is 80% of your current house value.
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Cost of PMI
The only way to find out the cost of your PMI is to call your lender’s customer service representative. However, typically the cost is $0.38-$0.78 per $100 of your loan amount. See following examples from the PMI chart:

 

Orig. Loan Amount 5% 10% 15%
$100,000 $65.00 $43.33 $31.67
$150,000 $97.50 $65.00 $47.51
$200,000 $130.00 $86.66 $63.34

 

 

 

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