private mortgage insurance (PMI)

PMI protects lenders from loss if the borrower defaults.

Not Required (Do Not Enter in Commas)

Min: 0
Max: 5
Decimals: 2

Remarks
The first number is a % of the loan that is paid up-front and is part of the "closing costs."  The second number is a % of the loan that is paid yearly.  To help lower "closing costs," the current trend is a higher premium charged yearly.

The cost of PMI is correlated to how much the Down Payment is. The following table illustrates "good estimates" of PMI premiums for common down payments

Important Tips: The PMI percent is calculated for you automatically.  "Dynamic" text displayed to the right of the private mortgage insurance. input box displays the percent you should enter into the Private Mortgage Ins. input box manually.  Yes, it is that easy.  Oh, please pay attention if the Down Payment is 20.0% or higher - PMI goes to zero (.00).

The bottom line: If your Down Payment is 20% or more (have a loan/value ratio (LTV) of 80% or less), PMI is not required.  However, ask your lender to be sure.

The controversy: If you put less than 20% down, say 10%, once you reach 20% equity you are no longer obligated to pay PMI  It is your responsibility to inform the insurance company when you reach the 20% equity though.

However, you can reach 20% equity in two ways.  By making enough payments (an Additional Payment can help build equity faster) and the house appreciating in value.  If you feel your home has appreciated enough in value to meet the 20% equity "cut-off" point, contact your lender and reorder an appraisal.  If the new appraised value, combined with the amount you have paid equals or exceeds 20%, they should assist you with the termination of the PMI premium.

Example
If PMI is .35% enter: .35

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