Graduated Payment Mortgage
We're planning on refinancing our FHA Graduated Payment Mortgage with a
5/1 ARM. Our current balance is about $96,000 and I'm guessing the
appraised value of our townhouse will be about $120,000, which is right
at the 80% mark requiring Private Mortgage Insurance (PMI). Since we will
be rolling the settlement costs into the loan, thus putting us over the
80% mark, I would like to get an idea of how much PMI costs. I also want
to know so that I can compare different rate/points combinations.
Is there a standard method for computing PMI? Or, can anyone give me a
realistic example?
The mortgage consultants I've spoken with tend to fudge around the issue.
One bank I talked to gave me a formula of 0.78 * ? / 12, where I didn't
quite catch what ? was - the amount of principal above the 80% mark maybe?
Not that I could figure out. About the most definate number I was able to get
when mortgage shopping was a percentage of 0.52 for a 30 year loan, and 0.26
for a 15 year loan. I think these are used the same as the 0.78 you list.
The ? is the loan value, and the formula gives you the monthly PMI payment.
The number is a percentage, so the full calculation is:
monthly payment = factor * loan_ammount / 1200
Another guy quotes something like a few thousand due at closing and $80
a month on a 180K 10% down 30 year loan. The company I ended up using tacked
an extra 3/8% on the interest rate rather than charging PMI. Maybe not the
best choice (can't remove, must re-fi), but cheaper than PMI and deductable.
However it ends up calculated, its not cheap.