Pennsylvania No PMI Mortgage. Private Mortgage Insurance (PMI) Prices. LPMI comparison
for loans in PA.
Private Mortgage Insurance (PMI) is
an insurance that protects the lender if a borrower defaults on
their loan. This insurance is what encourages the lender to
make loans over 80% LTV. When a borrower defaults on their
mortgage, that the average amount recovered by the bank after
foreclosure, due to costs, is 80% of the value of the home.
The PMI protects the bank by covering what they will not recoup in a
worst case scenario. Before PMI, when our parents bought
homes, 20% down was needed. PMI is temporary until you
establish 20% equity in your home.
Pennsylvania Conventional
mortgage underwriting guidelines require
PMI
on mortgages with greater than 80%
LTV.
There are 2 options to avoid paying PMI: LPMI and a
Piggyback 2nd mortgage.
Compare PMI, LPMI, and piggyback second mortgage
costs.
Calculate a
PA PMI Monthly Premium:
The maximum PMI price for a 30 year fixed rate
mortgage :
80.01 to 85% LTV:
Loan Amount (LA) x 0.0032 /
12
85.01 to 90% LTV: LA x .0052 / 12
90.01 to 95% LTV: LA x .0078 / 12
95 to 97% LTV:
LA x .009 /12
PMI factor is the number you multiply by the loan amount (.0032, .0052,
etc.)
For 15 year fixed loans the standard PMI factors are as follows: .0021,
.0023,.0056,.0079.
Calculate your LTV:
loan amount
or
loan amount sales price (purchase)
appraised value
(refinance)
PMI vs. Piggyback 2nd
Mortgage vs. Lender Paid Mortgage
Insurance (LPMI): *
What we like about traditional PMI
in 2008:
PMI is now tax deductible for those with adjusted gross income of less than
$100,000. If you qualify for this deduction, PMI may be to your advantage,
especially 80-85% LTV loans where the PMI is inexpensive. Please contact
us at 610 326-2099 to work up a side by side comparison. PMI has been the
best option for most borrowers with less than 20% down in 2008 because of the
tax benefits and the mortgage loan guideline changes with 2nd mortgages.
The draw back of LPMI is its long term cost: We advise never to accept LPMI unless you are
going to be moving or otherwise paying off the mortgage in the immediate
future. The reasons: It can never be removed! PMI is only paid until
you build a little equity (20%) and then it goes away. LPMI is a higher
rate you pay for the life of the loan. It may be tax deductible, but it
will cost thousands more dollars than the other 2 options over 30 years.
Mortgage companies like it, because they make more money with the higher interest
rate, and pay us loan officers bonuses for selling it, but we rank the worst
option.
PiggyBack 2nd Mortgage is an option if you have a 10% down payment:
When PMI is not tax deductible (higher incomes) this is a
money saving option. As long as the rate on the 2nd mortgage is not too
high, you will save money over the other options before taxes! (Only licensed 2nd mortgage brokers and lenders can offer this
option. Many mortgage brokers do not have 2nd mortgage licenses.)
The maximum CLTV with a 2nd mortgage is now 90%.
Please call us at 610 326-2099 for more
information.
*Consult a tax advisor for your specific situation and tax
implications. Assumes average income with itemized
deductions. Those with very high incomes may lose deductibility of mortgage
interest. Meant for informational purposes only.
