Asked by: Edilma Kleinhanss
asked in category: General Last Updated: 31st March, 2020

Is PMI a waste of money?

Yes, your PMI payments would cost about $12,432 in total, but your interest savings over the life of the loan more than make up for it. Plus, even when you pay for PMI, your monthly mortgage payment only totals $852. That's less than what your monthly payment would be if you wait.

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Keeping this in view, is PMI a good idea?

Private Mortgage Insurance (PMI) Makes Low Down Payment Loans Possible. It's important to realize, though, that mortgage insurance — of any kind — is neither “good” nor “bad”. Mortgage insurance helps people to become homeowners who might not otherwise qualify because they don't have 20% to put down on a home.

Also, how can I avoid PMI without 20% down? The traditional way to avoid paying PMI on a mortgage is to take out a piggyback loan. In that event, if you can only put up 5 percent down for your mortgage, you take out a second "piggyback" mortgage for 15 percent of the loan balance, and combine them for your 20 percent down payment.

In this manner, is it better to pay PMI or higher interest?

PMI Premium: The higher the PMI premium, the more likely the higher rate is a better deal. Premiums vary with the type of loan, term, down payment and other factors. In that event, the higher interest rate loan would be the better deal if you hold the mortgage less than 24 years.

Does PMI go down as you pay?

Since annual mortgage insurance is re-calculated each year, your PMI cost will go down every year as you pay off the loan. For FHA, VA, and USDA loans, the mortgage insurance rate is pre-set. Conventional PMI mortgage insurance is calculated based on your down payment amount and credit score.

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