Private Mortgage Insurance
Most mortgage companies will require you to purchase mortgage insurance if your down payment is less than 20% of the cost of the home. This insurance protects them if you default on your payments. There are various types of programs available, and your PMI payment is determined by several factors: amount borrowed, amount of the down payment and depth of coverage required by the lender. The yearly PMI premiums are usually computed as a percentage of the mortgage.
In most cases your PMI payment is included with your monthly mortgage payment. The example below shows the yearly payment based on a percentage of the amount borrowed. The software will compute an estimated yearly payment based on the figures that you enter using these rules:
|Down Payment||Fixed Rate||Adjustable Rate|
|10% to 15%||0.52%||0.65%|
|15% to 20%||0.32%||0.37%|
It is important to note that there are numerous PMI policies. This function only produces an ESTIMATED payment. Your actual payment may be different than the one computed by this software
Under most circumstances, you will be allowed to cancel this insurance once you have 20% equity in your home (the amount of the loan is less than 80% of the current market value of your home).
Check with your loan officer or real estate agent for details.
Remember to leave yourself enough money for closing costs...