Search thousands of topics on CostHelper.com

BROWSE ALL TOPICS >> appliances babies & children  cars  consumer electronics health & personal care home & garden personal finance  pets  schools small business weddings
CostHelper > Personal Finance  > Real Estate > Mortgage Insurance

Mortgage Insurance Cost


How Much Does Mortgage Insurance Cost?

 
average costUp-Front Mortgage Insurance Premium: Up to 3%high costMonthly Mortgage Insurance Premium: 0.5%-1% of Loan Amount
post E-mail post Post  

Homebuyers pay mortgage insurance to protect the lender in case the homebuyer defaults on the loan.

Typical costs:

  • Private mortgage insurance[1] can be charged as either an up-front premium or as an ongoing monthly payment, or both.
  • An up-front mortgage insurance premium can be as high as 3%, or $6,000 on a $200,000 home.
  • The monthly insurance premium is calculated as a percent of the mortgage annually, and then divided by 12 for equal monthly payments. Private mortgage insurance typically costs 0.5%-1% of the entire loan amount on an annual basis. On a $200,000 loan this means the homeowner could pay as much as $2,000 a year, or $167 per month.
  • If the Federal Housing Authority is the guarantor on the loan, then the borrower will likely be required to pay both an up-front premium and an ongoing one.
Related articles: Closing a Home, Title Insurance, Homeowner's Insurance

What should be included:
  • The rate is charged on a sliding scale; the larger the down payment, the lower the premium. For instance, a homebuyer who makes a 5% down payment will pay less than a homebuyer who makes a 15% down payment. The theory is that the larger the down payment the buyer is able to make, the lower the risk that the buyer will default on the loan -- and the less money lost if they do.
  • Mortgage insurance can be canceled once 20% of the mortgage has been paid. Check with the lender to find out what is required to formally cancel the insurance once it is time. Lenders must automatically cancel the insurance when the balance hits 78% of the loan, since by then the 20% threshold would have passed and the mortgage holder can reasonably be considered reliable. That is, unless the homebuyer is considered very high risk, such as if they had missed or been late on mortgage payments.
  • Some analysts advise that homebuyers should avoid paying mortgage insurance if at all possible. An investopedia.com analyst, for example, has advice on how to pay a smaller premium through "piggyback loans" -- essentially, a second loan on top of the mortgage that goes toward the down payment, thus reducing the mortgage insurance premium.
  • Mortgage insurance is one of several closing costs that buyers pay when purchasing a home.
  • Mortgage insurance is different from title insurance, which protects the lender and/or owner against the home's title, and homeowner's insurance, which protects the owner should the home be physically damaged.
Discounts:
  • Mortgage insurance has traditionally been tax deductible. However, this tax deduction was recently canceled by the federal government. The last year the tax deduction[2] was available is 2011.
  • In some states, it is common for the lender to share the cost of mortgage insurance.
  • Disaster victims, such as those who lost their homes in Hurricane Katrina, may have their mortgage insurance waived through the federal US Department of Housing and Urban Development[3] .
Shopping for mortgage insurance:
  • CNN Money provides an mortgage insurance calculator[4] .
  • Visit HUD's lenders list[5] to find a lender.
  • Mortgage Insurance Companies of America, a trade group, offers a list of frequently asked questions[6] on mortgage insurance.
post E-mail post Post  
CostHelper News


10 Key Ways to Prepare for Extreme Snow
Forecasters are predicting a true nor'easter will hit the eastern and central states with rain, thunderstorms, ice, snow and high winds over the Thanksgiving weekend. It's crucial to plan ahead, before bad weather hits. || Posted November 26 2013


10 Most Popular Cosmetic Procedures Before the Holidays
With reunions and other get-togethers scheduled during the holiday season, most people want to look their best at this time of year. For some, that means filling in those wrinkles with a bit of botox, or having a nip and tuck down here and there. || Posted November 23 2013

‣ All CostHelper Blog Posts


What People Are Paying - Recent Comments


 

Comment On Your Experience With Mortgage Insurance
 
Subject:  *
Amount Spent:  *
Type of Premium: Premium Amount: 
Loan Amount:   
Comments: 
Purchased:  Year: 
City:  * State:  *
 
Information about you:
Email:  * Email addresses are not displayed.
Name:  This is the name we'll display with your post.
me on this computer
*=required field.
 



External Resources:
  1.  www.bankrate.com/finance/mortgages/the-basics-of-private-mortgage-insurance-pmi.aspx
  2.  www.irs.gov/publications/p936/ar02.html#en_US_2011_publink1000259859
  3.  portal.hud.gov/hudportal/HUD?src=/program_offices/housing/sfh/ins/203h-dft
  4.  cgi.money.cnn.com/tools/mortgagecalc/
  5.  www.hud.gov/ll/code/llslcrit.cfm
  6.  www.privatemi.com/toolsresources/faqs.cfm
More Personal Finance Topics
Check Out All Costs for Personal Finance How Much Does a Traffic Ticket Attorney Cost? How Much Do Funeral Flowers Cost? How Much Do Tax Returns Cost?

Search Thousands of Topics on CostHelper.com

 
Today's Featured Cost Articles

About CostHelper
CostHelper is based in Silicon Valley and provides consumers with unbiased price information about thousands of goods and services. Our writers are experienced journalists who adhere to our strict editorial ethics policy.

CostHelper Community
Lizard
Paid: 150.00
The beardie was adopted for $20.00 at a local repticon. Tank was over 30 inch long, cost less than $70-80 at Petsmart during Xmas sale. Everything else were bought online from Dr. Foster, Amazon and Chewy... [more]
-Gaga
Pet Lizard Cost
My Entertainment Company Went Above & Beyond The Call Of Duty
Paid: 2100.00
All I can say is WOW. When I hired Evan Nine Entertainment, I had no idea I was going to get so much extra for my money. His company handled The DJ/MC, Photography, Uplighting, and Wedding Officiant... [more]
-Linda Grayson
Wedding DJ Cost
TTE 93306
Paid: 1208.00
Went for echo at cardiologist's office. Hadn't met deductible and my BCBS estimate online was $408 done in doctor's office. Well, the cardiology office had been acquired by Mission Hospital so they charged their rate which was ~$1980... [more]
-C. V. Wynne, M.D.
Echocardiogram Cost
Broken drain line replacment
Paid: 7600.00
After Roto-Rooter inspected the drain line which could not get passed 35 feet from the cleanout, serviceman suggested for a new cleanout to be installed near the area where the camera could not pass, this at a cost of $1,450... [more]
-#IFEELTAKEN
Sewer Line Replacement Cost
Cost should be capped
Paid: 4550.00
In August of 2014, my husband need to be transported to the helicopter pad at the hospital and we received a bill for $4,550 and when we questioned why so much no one could provide a valid answer. The helicopter pad is less than ... [more]
-dkoz
Ambulance Cost
Cost of topo survey
Paid: 3800.00
Surveyor staked four corners and surveyed entire 4.95 acre lot at 2 ft contours in Issaquah, WA... [more]
-User in WA
Property Survey Cost