Private Mortgage Insurance Rates – Insurance Companies

Private Mortgage Insurance Rates are important to consider before taking such type of insurance. Before explaining Private Mortgage Insurance Cost, we should know about what is Private Mortgage Insurance?

PMI – Private Mortgage Insurance is referred to those people who become owners of a home newly. If there down payment of house is 20 % or less than the sale price of the property, they are going to purchase. The actual purpose of private mortgage insurance is to safe mortgagees when the new landowner depends on their home loan.

Well, PMI is considered to be worst insurance in many cases for some people as it only protects the mortgagees but it is the real something good that private mortgage does. We can take it as kind to many people as it has supported a number of people to purchase home s at a very low down payment. When there was no private mortgage insurance and insurance companies weren’t allowing lenders to use insurance for that purpose then, at that time people found themselves stick to pay the down cost by hook or crook as they were forced to pay without any discount – if they need a home! That attitude was so rude by sellers but now, PMI has disabled this rudeness and people can now buy homes easily with low down payment. Besides this, Private Mortgage Insurance increases the home loan acceptance points for those people who have acquired PMI, easily!

PRIVATE MORTGAGE INSURANCE RATES

For sure, PMI cost is not same for all as for different land rates, down payments are different. Also, it depends on mortgage loan value. Most of the times, private mortgage is half of the actual value..

FORMULA FOR CALCULATING PRIVATE MORTGAGE INSURANCE RATES

Annual PMI = 100 – (% of Paid Down Payment) x (House Sale Price) x 0.005

For instance: I bought a house of worth $500,000 and I paid 20% down payment. So, from the formula I mentioned I’ll now calculate annual private mortgage insurance.

My Annual PMI would be = [100 – (20)] x $500,000 x 0.005 == $2000 which means mortgage is $167 approximately per month.

IMPORTANT POINTS RELATED TO PRIVATE MORTGAGE LOAN

Always, keep your payments tracked and noticed and, inform the moneylender once you complete 80% equity of the home. Although, in is mentioned within the regulations of Homeowner Protection Act that lender himself explain the duration of payments but still, it is a good practice to keep record of your own payments sent. In many situations – specially, in the case of high risk loan takers, lenders usually make mortgagees continue for private mortgage insurance throughout loan duration. So, it becomes important that how many of your payments have been completed and what credit is left behind and else, should be kept as a record.

HOW TO AVOID PRIVATE MORTGAGE INSURANCE

There are many people who pay Private Mortgage for years. This happens when they have to pay more interest on home loan or some investors waive their private mortgage insurance demands if they agree to pay interest rate at higher value. Besides this, mortgage interest is deductible for tax so taking it is not a as such big problem if you are ready to do. One other solution to avoid private mortgage is to provide the proof to lender that home value has increased. If it has happened really then, 20 % or more equivalent is applicable to abort mortgage insurance. But, this is not sure that you may cancel it right when you provide the proof as it may take some time to verify the claim you did before creditor.

Final Words: Go for it when you are ready to follow the rules, ups and downs in different cases and risk bearing demands. There is no way to get money back when you haven’t any proof that you paid it.