This is the second article in the blog series, “How Does PMI Work”. You can read Part 1 here.
How Does PMI Work – Private Mortgage Insurance Fees
Recently, the Federal Housing Administration drastically cut the cost of mortgage insurance premiums for FHA loans. Premiums were cut from around 1.35 percent of a loan’s value to approximately 0.85 percent.
Depending on the amount of your down payment, as well as your credit score and loan terms, PMI fees will vary, from around 0.3 percent to 2 percent of the original loan amount per year.
The more money you borrow, the more you will pay because PMI is a percentage of the loan amount. You will pay a higher rate with a greater number of risk factors, including poor credit.
How Does PMI Work - When Do You Pay It?
In most cases, you are required to make a monthly payment. The monthly premium is added to your mortgage payment. However, you also have the option of making a large upfront payment to prevent the premium from being added to your monthly mortgage payment.
Read Part 3 in my blog series, “How Does PMI Work?”.
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