Can someone explain PMI to me?

Jliongrrrl · August 2011

I'm sorry if this is asked a lot. I understand what PMI is and why I have to pay it until I have 20% equity in my home, but how on earth is it calculated? Does it vary by lender? DH and I are looking at a home that's listed at $198,900 and we plan to put $10,000 down on an FHA loan. The lender we were preapproved with seems to calculate the PMI as 1.1% of total price of the home. Is this the norm/avg?

Thanks for any clarification!

emarston1 · August 2011

Honestly, I'm not sure how it is calculated but check your loan requirements carefully. We have an FHA loan and we are required to pay their version of PMI (MIP I think?) for a minimum of 5 years even if we hit the 20% equity mark before 5 years. So if we won the lottery tomorrow and paid off our mortgage, we would still have to pay the PMI for 5 years.

nsfw · August 2011

There is a PMI percentage rate that corresponds to your LTV (loan to value) rate. The PMI percentage depends on your purchase price and the amount of your down payment and also your mortgage term (30 years, 15 years, etc).

It varies by lender and location.

oneplusoneistwo · August 2011

I believe FHA has a specific PMI calc. For conventional loans, I believe your broker can actually "shop around" for a good PMI rate.

This might help:

http://ncfhaexpert.com/fha/fha-pmi-changes-4182011-again/

jenn3745 · September 2011

We are about to close on an FHA loan and will be paying 1.1% every year on PMI. It's standard. On a convenional loan, you would pay a premium and then a lesser amount each year until you hit your 80%, but on an FHA loan these days you pay the UFPMI and then you still pay 1.1% per year. It didn't used to be like this, on a house similarly priced to ours, a friend got into an FHA mortgage 3 years back and only pays about 125.00 per month. We will be paying ovcer 300. GAK!

Can someone explain PMI to me?

Re: Can someone explain PMI to me?

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