How to Figure a Mortgage Insurance Premium

How to Figure a Mortgage Insurance Premium

You will have to pay mortgage insurance if you without the 20% down payment. You are able to track your payment of the premiums from the comfort of your home if you want to. Those who are buying their homes for the first time have the advantage of not being required to pay the 20% place on their loans, since most of them do not have the money. This is an advantage to the buyers but a disadvantage to the lenders who now have to lend to people who they are not sure will pay. However, mortgage insurance is designed to protect them from this, so that when you default in the payment of your mortgage every month, the insurance company will pay for you.

You will have to pay your PMI until you have a loan to value percentage of less than 80%. Having paid a less than 20% place, you will have a loan to value ratio of more than 80%. To get to know how much premium you will pay every month, you need to know your LTV ratio. This is the value of the amount of money you nevertheless have to pay from the principal divided by the value of the home. The amount you nevertheless have to pay is the total amount you have paid subtracted from the total value of the loan. The value of the home will have to be gotten from an appraisal especially when you speculate that the value of the home has increased ever since you got the loan. In most situations, this is the buy price of the home. There are many factors that will come in to your favor and increase your LTV, like the increase in the value of your home. Factors that will affect your LTV include the percentage of down payment you made, the interest rates of the loan, the kind of loan and the term of payment.

Once you have your LTV, you will find out from your lender the percentage of PMI you have to pay now that your LTV is a certain percentage. Most of the time, your percentage of PMI will be 0.5% to1% of the value nevertheless remaining to be paid. You will multiply the figures and get the amount of money you will pay as PMI every year. When this is divided by 12, you will have the money you will have to pay every month alongside your monthly mortgage payments.

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