If you plan to have your home (and your mortgage) longer than that period of time, LPMI may not be for you. When considering LPMI, use a mortgage calculator to create an amortization schedule, and see what year your mortgage LTV will reach 78 percent. It never goes down, and it never goes away - unless you pay off the loan. However, LPMI is built into your mortgage interest rate. Monthly borrower-paid PMI coverage gets cheaper over time as your loan balance is paid down, and it drops off altogether when your loan-to-value (LTV) reaches 78 percent. LPMI comes with some disadvantages, however. After taxes, LPMI might be a better deal for you. Finally, if your adjusted gross income exceeds $54,500 ($109,000 for married couples filing jointly), PMI is not tax deductible, while mortgage interest is.

You'll want to compare the mortgage payment with LPMI to the mortgage payment with monthly borrower-paid PMI and see which one is better. This might allow you to purchase a more expensive home, or simply reduce your costs. Depending on how much of the single premium savings your lender passes on to you, your monthly costs can be significantly lower. For a 90 percent loan to a borrower with a 740 FICO, lender-paid mortgage insurance (LPMI) premium is 2 percent. But what if you don't have the money? Mortgage insurers allow the lender to pay it for you. You can see how the single premium might be much cheaper after about four years. According to mortgage insurer Genworth, a borrower with 10 percent down and a 740 FICO score pays 0.41 percent of the mortgage balance per year, or a one-time premium of 1.29 percent of the initial loan amount. However, it can also be paid in a single premium, upfront. Most people pay PMI in monthly installments.

However, if you plan to make 26 bi-weekly payments or additional monthly payments, include the extra payments here.įind a Lender Offering Lender-Paid Mortgage Insurance Most mortgages require 12 monthly payments per year. Lenders must disclose APR when they advertise, but your mortgage payments are based on the stated rate. PMI rates are lower for loans with terms of 20 years or less.Įnter the 'stated' or 'advertised' interest rate, not the annual percentage rate (APR), which includes the loan's costs. Most mortgages are either 15 or 30 years long, but can be of any length. If you prefer, you can choose to enter your down payment or home equity amount as a percentage of the home's purchase price or estimated value.Įnter the term of your loan in years. Don't include your closing costs in this amount. If refinancing, estimate the amount of home equity in dollars. If you don't know your FICO, you can estimate it.Įnter the dollars available for your down payment. If there are three scores, enter the middle score. If your credit report shows two scores, use the lower one. If refinancing, enter your best estimate of the property value. If buying a home, enter the purchase price or the home's appraised value, whichever is lower.

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