Oh My, Look at Our Conventional Mortgage Insurance Costs!


Low Conventional Mortgage Insurance Costs | Low Cost Mortgage Option | Utah Mortgage Company

For the third time in the last 6 months we've negotiated lower private mortgage insurance (P.M.I.) costs to help you get the best mortgage possible!

How Much Lower will My Private Mortgage Insurance Be?

Maybe you're thinking that it won't make a big difference to use our lower mortgage insurance costs. Let's take a look and see how much money you'll save. If you were buying your first home at a sales price of $200,000 with a 3% down payment* and a 680 credit score, this is how much money you would save each month:

The Other Guy's Monthly Mortgage Insurance Cost

$158.43

Our Monthly Mortgage Insurance Cost

$137.42

You Save

$21.01 a month

That's $21 every month. What would you do with that extra cash? You could use it to pay for a security system to protect your family or help you pay off your mortgage sooner by applying it towards your principal balance.

*This example is based on a very common first-time home buyer scenario: $200,000 sales price, $194,000 loan amount, 97% L.T.V., 680 credit score, and 25% M.I. coverage. Loan details: 3% down payment, 30 year fixed-rate mortgage, and an annual percentage rate of 5.129% (as of 9/11/2018).

What is Private Mortgage Insurance?

Private mortgage insurance, or PMI, is an insurance policy that protects the mortgage lender in case your loan defaults. It’s required on conventional home loans when your loan-to-value is greater than 80%, which means your down payment is less than 20% of the purchase price. If you’re required to have private mortgage insurance on your home loan, there are two common ways to pay for it.

1. Borrower Paid Mortgage Insurance (BPMI)

Borrower paid mortgage insurance is a monthly cost that’s added to your mortgage payment. The amount of your mortgage insurance premium is determined by your credit scores, loan amount, and other factors. When you choose BMPI, you’ll pay the monthly insurance premium until you’ve reached 20% equity in your home, at which point you can request to have it removed. It’s worth mentioning that unless you request to have your mortgage insurance removed; it won’t automatically fall off until you’ve reached 22% equity in your home.

2. Lender Paid Mortgage Insurance (LPMI)

Lender paid mortgage insurance is an alternative to paying the insurance premium yourself. This option allows you to waive the monthly premium in exchange for a slightly higher interest rate. Even with the increased interest rate, the overall monthly mortgage payment on a loan with LPMI is typically lower than the payment would be with BPMI.

How much is mortgage insurance? | | Low Cost Home Loans | Utah Mortgage Company