What is PMI and how do I calculate how much that is going to add to my monthly mortgage?

Question

just in case this is useful I'm planing in buying in New Haven CT

Answer 1

It is insurance required by the lender for loans over 80% of value of the home. It protects the lender (getting paid) - not you. It should cost around $15 per hundred thousand per month. You may be better off having this paid up front and rolled into your financing. If you are paying at least 20% down you should not need PMI (it is for the lender not you).

Answer 2

PMI is an acronym for Private Mortgage Insurance. This is insurance that the buyer purchases to protect the lender against the expense of default on loan where the borrower makes a down payment of less than 20% of the sales price.

The costs of PMI are a percentage of the loan amount divided by 12 and then added to the monthly principal, interest, property tax and fire insurance payment. That percentage will vary by the actual percentage of down payment the borrower does make. The less you put down the higher the cost of the PMI.

PMI is automatically removed from your loan after 2 years as long as payment have been maintained in a timely manner and local property values are not declining. IN addition, effective this tax year, PMI is a deductible expense on Schedule A of your Federal Income Tax Return just as is your mortgage interest paid and your property taxes.

Feel free to email me if you have further questions.

Answer 3

PMI is Private Mortgage Insurance. It's required if you have less than 80% equity in your home. The rate will be determined by the insurer seleced by the lender. The lender can quote what your premium will be.