Search thousands of topics on CostHelper.com

BROWSE ALL TOPICS >> babies & children  cars  consumer electronics health & personal care home & garden personal finance  pets  schools small business sports 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 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 Post  
CostHelper News


Forgotten Expenses In a Home Addition Budget
Items like construction costs, permit fees or debris removal aren't the only expenses to consider when calculating the total costs of a home remodeling project. || Posted August 5 2013


And the Best Bacon Is...
This little piggy went to market.After that, Consumer Reports bought samples and tasted to determine which little piggy offered the best bacon.Top honors go to Costco, it turns out. || Posted October 5 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
Replace leaking supply line40' w/copper from meter to house
Paid: 2150.00
Water supply line leaking, need dig trench, 40' Type L copper pipe. 1st plumber quote $6500. Did some research, 2nd quote is $2150. Depth by city code 16 - 18", both licensed, guarantee 1 year... [more]
-Meeept2000
Replacing Copper Pipes Cost
About to start babysitting
Paid: 6.00
I’m about to start babysitting for their first time ever (for pay) and I was wondering if my pay was too high or too low. Tha family has two boys, a ten year old and an eight year old... [more]
-
Baby Sitter Cost
cost of ear drops
Paid: 67.00
I was prescribed antibiotic drops for an ear infection. Went to pick up at Walgreen's and declined due to price of $219. I asked the medical facility to send prescription to Costco. Picked it up there for $67... [more]
-jeffo
Ear Infection Cost
Be aware
Paid: 0.00
Be aware that many of the listed locksmiths are a call service and many of them are in another state. Some even try to pass as other businesses. Academy lock is a thief and abuses they employed too. There are many... [more]
-Martin Y.
Locksmith Cost
Deep cleaning
Paid: 9999.00
As a dental hygienist with 22 years experience, I can tell you “DEEP CLEANING” is not a SCAM! 1st and foremost remember your insurance coverage is to assist with treatment payments... [more]
-Tasha Nicole
Teeth Cleaning Cost
04 Nissan Sentra
Paid: 120.00
I had one key for the car I just bought a few months back, well... While I was closing the front door to my house my key was caught and severely bent, I tried to gently tap it back straight but needless to say it snapped in half... [more]
-Mz Sentra
Key Copy Cost