How to figure Private Mortgage Insurance (PMI)?

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PostPosted: Thu Apr 18, 2013 12:56 pm   Post subject: How to figure Private Mortgage Insurance (PMI)?  

I am a new home buyer. My first question is, how does the the lender figure PMI? I've been reading, but all I find is "Base Points". I just want to figure the %.





Here is my situation. I'm buying a HUD home on the Good Neighbor Next Door (GNND) Program. The home's "AS IS" value is $30K. Under GNND, I must get a loan for $15K to purchase the home and pay $100 down. However, I'm using a FHA 203K to finance repairs. I'm think $15K for repairs, which puts me at a loan for $30K (the value of the home). Lender is charging 4.0% Interest rate. What will be the PMI?

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PostPosted: Fri Apr 19, 2013 11:14 am   Post subject:   

Shamelessly pasting from SFGate:



1) Find out the loan-to-value, or LTV, ratio of your house. The "L" is the amount of money you are borrowing versus the "V," or the value of your home. For example, if your home is worth $500,000 and you only put down $50,000, then you owe the mortgage company $450,000. Find the LTV ratio by dividing the loan amount by the home's value. Then multiply the answer by 100. 450,000 / 500,000 = 0.9 0.9 X 100 = 90 percent LTV.



2) Look at the lender's PMI table. Lenders figure out how much PMI you need to pay by consulting the chart. For example, an LTV of 90 percent may warrant a PMI of 0.0075 percent.



3) Multiply your mortgage loan by your specific PMI rate according to the lender's chart. For example: 450,000 x 0.0075 = $3,375 You would owe $3,375 a year for the PMI.



4) Divide the yearly PMI amount by 12 to find out your monthly PMI amount. For example: $3,375 / 12 = $281.25 per month.



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Owning a home is a keystone of wealth - both financial affluence and emotional security. ~ Suze Orman
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