Is it worth paying PMI upfront?
It’s my first time buying and I was wondering if it’s worth paying PMI upfront or just monthly payments? My lender gave me a choice to pay $4500 at closing or do monthly payments which is $85. The price of the home is $670k and I will do a 10% down payment. Is there a calculator I could use to figure out how long it will take to pay off 20% house equity and remove PMI from my account? I plan on living in the house for more than 6 years and may not contribute more to reach 20% equity faster. by syncten40 from Grand Canyon, Arizona. Jun 28th 2022
Joe Metzler (JoeMetzler)
#17 ranked lender in Minnesota - 4,848 contributions
Yes, no, and maybe... Sorry... You have all the basic math, and only you can answer your own question. I think up-front payment is valuable in a slower appreciation market, as essentially it works out to be pre-paying about 3-years of standard mortgage insurance. I think it is a poor idea in a fast appreciating market like we've had the past bunch of years, as through just appreciation, you'll probably easily gain 10%, and be able to drop PMI in two years versus prepaying up-front for three. You say you figure more than 6-years, but what something may change?? Finally, do you really have the extra money to pre-pay it up-front today, or is that a burden? I provide home mortgage loans in MN WI IA ND SD. Find me at WI-MortgageBroker.com - Cambria Mortgage, NMLS 274132
Dave Skow (daveskow)
#15 ranked lender in Washington - 455 contributions
1) pay the monthly mtg ins and try to eliminate it asap in the future ..check with the lender you are usign and find out their procedure for this ..some lenders require you pay 2 yr of payments before they will consider dropping the mtg ins 2) you will likely have to pay for an appraisal
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