Lender Paid PMI

I did it because I felt that if gave them more of an incentive to eliminate it as soon as possible. It was the same cost to me either way.

If it takes you 7 years to pay off your PMI in my opinion you are buying too big of a house.

Are you real young with realistic expectations of good income increases?

The average mortgage is only 5 years, I can tell you that most people say that they will never leave their house. I'm not saying you are wrong, but I am saying few people come on here saying they are getting a mortgage for 3, 4, or 5 years.

The main issue with buying a house with that much of a payment as interest and PMI is that it is going to take you probably 4 years to get to the point of not losing money if you had to sell the house for the price you paid. Maybe it goes up, or maybe it goes down and lose more. Remember, it takes at least 6 and usually 8% to sell a house. Its going to cost you at least $5,000 in closing costs for your mortgage. On a $200,000 house thats $17,000 you have to pay off before you break even if you have to sell it.

there is 3rd option. You can pay your MI up front as a lump sum. That is all your lender is doing to the PMI company, and increasing your rate to do so. Ask you lender if they offer "single pay MI". It will be an additional lump sum, but not as much as the remaining in your 20%, so it might be doable. As with the lender paid, you wont see a difference in your payment, but do the math and it might be cheaper in the long run, as you wont get a hit in the rate if you pay it. That assumes, that as you stated you will be in the house/loan for a long time. If that assumption is incorrect (as mentioned above) the math certainly changes.

I specifically stated That assumes, that as you stated you will be in the house/loan for a long time. I also stated ]If that assumption is incorrect (as mentioned above) the math certainly changes[/i].

certainly there are several factors we don't know about, as you mentioned...kids, job situation, divorce etc. Just throwing it out there as a potential option.

quote:

---

The way my lender explained it was that we could get the current best 30 year fixed rate ( was 3.7 yesterday) and pay PMI which would fall off after 7 or so years

OR

we could add .625 to the rate for the life of the loan and pay no PMI ie nothing falls off but you never pay PMI.

---

I would go with the first option, personally. I did a conventional loan with 5% down on my house. PMI would have lasted a little more than 8 years had I not been making extra principal payments. But I should reach 22% equity in about 3.5 years and PMI will go away at that point.

It sounds like y'all are making plenty enough money to make extra principal payments and knock out PMI in just 2-3 years.

I just randomly made lump sum payments.. I never had a schedule that I went by or anything. However, I did make a handy little excel spreadsheet that I could use to easily calculate my progress and run different scenarios. If you post your email I don't mind sending it to you.