Pmi?

[ducklite]

Sounds like the same thing. In the US, PMI (stands for Private Mortgage Insurance) is not "required" by law but I doubt you could find a lender who doesn't require it for LTV of 80% or more. I don't know if you have the option to pay it upfront - I've never seen that. The ones I've seen have always been added to the monthly payment. And it does not transfer from house to house - it is part of the loan.

Actually UG and one of the other PMI companies (might be PMI) do have a one time rate, where the entire amount is paid upfront at closing, but I've never seen an underwriter or closer place a loan that way--if you pay off early for any reason, you get nothing back (unlike FHA).

I know tlbwriter knows this, but as an FYI for others, if you have perfect credit, steady income, decent DTI or great compensating factors, and a good cash reserve position, you can look into an 80/10/10 where they write a 80% first, 10% second, and you put 10% down to avoid PMI.

Anne

 

[rocky41102]

We had an FHA loan when we built our house. The PMI on FHA loans is a little higher than normal loans. Luckily our house value went up so we were able to refinance after a year with a different lender. We got a conventional 30 year mortgage on 80% of our home value than a fixed rate home equity for the remaining portion. By doing it that way we were able to drop the PMI. I hated paying the closing costs again, but we ended up with a lower interest rate which helped. The home equity has a higher rate than the conventional mortgage, but the interest is deductible. Our PMI payment was somewhere close to $90 a month (maybe even higher). I would have done anything to get rid of the PMI because the money doesn't benefit you at all.
Overall we saved a ton of money by refinancing even after paying closing costs.