can a homebuyer request that PMI be rolled over into the mortgage for so many years thus lessenig the burden?

Answer 1

That wouldn't lessen the burden, it would increase it since you'd now be paying interest on it.

PMI is a separate monthly add-on to the mortgage payment. If you prepaid it and rolled it into the loan, you'd be paying on it for the life of the loan. As it stands, it will automatically drop off once you've paid down below 80% LTV. You can also apply to have it removed before then (usually after at least one year of on-time payments) if you can prove that you are now at less than 80% LTV as established by an independent appraisal of the property.

Answer 2

With a down payment less than 20%, you would have basically 4 ways to deal with private mortgage insurance (PMI).

You can just pay it monthly. It would cancel out once your equity reached 20%. With a 5% down program, and in today's market, that might take 10 years. I usually do not recommend this type of program.

You can do a "piggy back" loan, which would be two mortgages. The first would be at 80% of the purchase price, so there would be no mortgage insurance required. The 2nd mortgage would be at a higher rate - usually around the Prime rate (currently 7.50%). I usually do not recommend this, as you would immediately have 2 liens against your property, and the closing costs would be higher.

You could also finance an up-front mortgage insurance premium it into the loan. Not all programs allow this, but most do. Instead of a $150/month PMI payment, for example, you might find your payment increase by only $30. So your monthly payment would be less, but you would start out with a larger loan amount and pay interest on that over the life of the loan.

Financing your PMI is not a bad way to go, but my recommendation would be to have the lender pay the mortgage insurance in lieu of a higher rate - approx 0.50% higher than if you paid the PMI on your own. It's called Lender Paid Mortgage Insurance (LPMI). The down side to this is that it is never cancelled. Once you reach a 20% equity position, your rate doesn't go down. The rate will never change unless you refinance. But again in today's market, that might be many many years down the road.

Email me if you have other questions.

Answer 3

No. PMI is an insurance for the lender if you default since you have little of your own money in the deal. You are actually asking that the insurance premium be loaned to you, on type of the mortgage. This would be like asking for the taxes to be rolled into the mortgage.

It really sounds like you can't afford this house. Maybe you should rethink it, especially since your PMI payment each month is only small part of the total payment.