There are many phrases in life that when uttered immediately evoke a fearful response. Phrases like “last call”, “consult your doctor”, “I need to talk to you”, and “you’re the father”. “Private Mortgage Insurance” is another one people don’t like. In fact, they hate it with a passion. I should know, I pay it every month and it hurts to see that money go towards “nothing” every time I make a payment.
Many people believe PMI is unavoidable unless you have 20% down. And for the most part they have been right. Until now. Right now there are at least two alternatives to trudging through your house payment each month carrying with it the dreaded mortgage insurance premium. In fact there has never been a better time to look at Lender-Paid Mortgage Insurance or even the “Up Front Mortgage Insurance” option. See the table below for these two alternatives. While these loans still technically include private mortgage insurance they are vastly superior to the monthly PMI premium.
The first table is the Lender-Paid option and the second table is the Up Front option:
|Roll Into Rate||Paid Upfront|
|BPMI||MI Buster (LPMI)||DIFF||BPMI||MI Buster (LPMI)||DIFF|
|Loan Amount||300,000||300,000||Loan Amount||300,000||300,000|
|P&I Payment||$1,520||$1,542||($22)||P&I Payment||$1,520||$1,520||$0|
|MI Factor||0.60%||0.00%||MI Factor||0.60%||0.00%|
|MI Payment||$150||$0||$150||MI Payment||$150||$0||$150|
|Upfront Fee||$0||$0||Upfront Fee||$0||$3,750|
|Total Payment||$1,670||$1,542||$128||Total Payment||$1,670||$1,520||$150|
|Annualized||$1,532||Months to Break Even||25|
|Months until MI falls off||87|