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PMI for Dummies, please!

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Anonymous
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PMI for Dummies, please!

Okay, I understand that in most (if not all) cases you will pay PMI if you put down less than 20% on the purchase price. What I am ultimatley trying to figure out is whether I'd be better off plunking down 20% since I do have it, or if I'd be better putting down 10-15% and keeping more in reserves. Here are the questions I have with regards to this:
 
  • Is PMI less if I put down 15% rather than say 5%?
  • I saw a chart somewhere that showed something that said 680 and above, which I assume is the credit score, so do you pay less for PMI with lower scores?
  • In your opinion(s) woudl it be better to eliminate PMI and pay 20% down, or hold on to more reserves and put down less? I'm thinking if PMI is based on some sliding scale of how much you put down, it may not be that much more a month. But if that doesn't make a difference it would probably be wise to pay 20% down.

A few side notes.

Credit will be 730-740 or higher.  Will probably live in house approx. 5 years.



Message Edited by UpUpUp on 08-07-2008 01:18 PM
Message 1 of 13
12 REPLIES 12
Anonymous
Not applicable

Re: PMI for Dummies, please!



UpUpUp wrote:
Okay, I understand that in most (if not all) cases you will pay PMI if you put down less than 20% on the purchase price. What I am ultimatley trying to figure out is whether I'd be better off plunking down 20% since I do have it, or if I'd be better putting down 10-15% and keeping more in reserves. Here are the questions I have with regards to this:
 
  • Is PMI less if I put down 15% rather than say 5%?
  • I saw a chart somewhere that showed something that said 680 and above, which I assume is the credit score, so do you pay less for PMI with lower scores?
  • In your opinion(s) woudl it be better to eliminate PMI and pay 20% down, or hold on to more reserves and put down less? I'm thinking if PMI is based on some sliding scale of how much you put down, it may not be that much more a month. But if that doesn't make a difference it would probably be wise to pay 20% down.

A few side notes.

Credit will be 730-740 or higher.  Will probably live in house approx. 5 years.



Message Edited by UpUpUp on 08-07-2008 01:18 PM

If your only staying in the house for 5 years than I would put as little down as possible and save the rest.  You don't know what the housing market will be like in 5 years so even if you sell this house you might not get a lot in return and will need the cash to reach the 20% if/when you plan on buying a home where you'll live there for more than 5 years
Message 2 of 13
Anonymous
Not applicable

Re: PMI for Dummies, please!



steelfan wrote:


If your only staying in the house for 5 years than I would put as little down as possible and save the rest.  You don't know what the housing market will be like in 5 years so even if you sell this house you might not get a lot in return and will need the cash to reach the 20% if/when you plan on buying a home where you'll live there for more than 5 years


Thanks for the advice. I'm self-employed and will just have 2 years tax returns to show my income when applying. The first year, being startup and income being considerably lower, especially after taking deductions and write-offs. So, even though credit, etc. is good, I'm expecting to have to put down a fair chunk in order to get approved.  Even obtaining credit cards has proven to be a challenge since being self employed. Smiley Sad
 
Does anyone know how to compute the PMI?  I would love to try to figure out approximately how much it would cost me over an 5 year span if I was paying PMI...to see what the difference would be. I can't make much sense out of the links I have found online.
Message 3 of 13
Anonymous
Not applicable

Re: PMI for Dummies, please!

Here's a great article on PMI and how to calculate. There's oodles of PMI calculators all over the 'net, but personally, I feel more empowered when I can figure out how to calculate stuff MYSELF rather than have some java applet do it for me!!

I guess we're like two peas in a pod!! Smiley Wink

Yay for self-empowerment!! Smiley Wink

http://www.bankrate.com/brm/news/mtg/20010601b.asp
Message 4 of 13
Anonymous
Not applicable

Re: PMI for Dummies, please!



Wonderin wrote:
Here's a great article on PMI and how to calculate. There's oodles of PMI calculators all over the 'net, but personally, I feel more empowered when I can figure out how to calculate stuff MYSELF rather than have some java applet do it for me!!

I guess we're like two peas in a pod!! Smiley Wink

Yay for self-empowerment!! Smiley Wink

http://www.bankrate.com/brm/news/mtg/20010601b.asp

Thank you. Yes, I am trying to figure out the the way it's calculated so I can play around with some figures and numbers myself. I do feel more empowered when I actually understand it myself. The calculators are nice, but I want to "get it" myself!  I think you understand exactly how I'm feeling.
 
I'll go check out the article now. Thanks so much!
Message 5 of 13
Anonymous
Not applicable

Re: PMI for Dummies, please!



UpUpUp wrote:


steelfan wrote:


If your only staying in the house for 5 years than I would put as little down as possible and save the rest.  You don't know what the housing market will be like in 5 years so even if you sell this house you might not get a lot in return and will need the cash to reach the 20% if/when you plan on buying a home where you'll live there for more than 5 years


Thanks for the advice. I'm self-employed and will just have 2 years tax returns to show my income when applying. The first year, being startup and income being considerably lower, especially after taking deductions and write-offs. So, even though credit, etc. is good, I'm expecting to have to put down a fair chunk in order to get approved.  Even obtaining credit cards has proven to be a challenge since being self employed. Smiley Sad
 
Does anyone know how to compute the PMI?  I would love to try to figure out approximately how much it would cost me over an 5 year span if I was paying PMI...to see what the difference would be. I can't make much sense out of the links I have found online.


What I would do in your case is go fha even though you have the scores to go conventional.  The reason being is fha olny requires 3% down of your own funds.  They will require you to pay mi insurance for 5  years unless you do a 15 year loan.  If you didn't make a lot of $ last year maybe your income falls in your state/county hud income limit which will qualify you for downpayment assistance through a local hud officer.  If you qualify for that you could consider buying a house that you can see yourself living in for more than 5 years
Message 6 of 13
Anonymous
Not applicable

Re: PMI for Dummies, please!

Thanks, Wonderin...the article put it all together for me.  I totally get it now!
 
Steel, thanks for the advice. That's actually a very good idea. I'll start looking into that for the area I'm interested in.
 
Thanks guys!
Message 7 of 13
Anonymous
Not applicable

Re: PMI for Dummies, please!



@Anonymous wrote:


@Anonymous wrote:
Here's a great article on PMI and how to calculate. There's oodles of PMI calculators all over the 'net, but personally, I feel more empowered when I can figure out how to calculate stuff MYSELF rather than have some java applet do it for me!!

I guess we're like two peas in a pod!! Smiley Wink

Yay for self-empowerment!! Smiley Wink

http://www.bankrate.com/brm/news/mtg/20010601b.asp

Thank you. Yes, I am trying to figure out the the way it's calculated so I can play around with some figures and numbers myself. I do feel more empowered when I actually understand it myself. The calculators are nice, but I want to "get it" myself!  I think you understand exactly how I'm feeling.
 
I'll go check out the article now. Thanks so much!





Yep!! It feels SO good!!

Yannow, if you'd had told me two years ago ... heck, three months ago, that I could learn what PMI, DtI, LtV and all those abbreviations means, much less the ratios/math to calculate those things, I sincerely would have thought you had a major screw loose. Math and I aren't even on a last-name-proceeded-by-a-salutation basis.

Math walks into the room and I just avert my eyes out of respect and fear!! LOL!

But everyone here has really taught me more than I could have ever learned on my own! Even hubby's impressed!! Smiley Happy
Message 8 of 13
WhirledPeasPlease
Moderator Emeritus

Re: PMI for Dummies, please!



Wonderin wrote:

Yep!! It feels SO good!!

Yannow, if you'd had told me two years ago ... heck, three months ago, that I could learn what PMI, DtI, LtV and all those abbreviations means, much less the ratios/math to calculate those things, I sincerely would have thought you had a major screw loose. Math and I aren't even on a last-name-proceeded-by-a-salutation basis.

Math walks into the room and I just avert my eyes out of respect and fear!! LOL!

But everyone here has really taught me more than I could have ever learned on my own! Even hubby's impressed!! Smiley Happy

If you need help tackling that fear just let me know via PM. 
 
Ms. Peas, former math teacher
 
Class is in session...  please place your gum in the wastebasket.  Smiley Wink
~*~*~*~*~*~*~*~*~*~*~
From 700 in 2008 to 498 in 2012...
4/23/12 -- BK 13 date of filing EQ = 505
4/18/12 -- EQ 498
12/5/13 -- EQ 669
Here we go.... back on track.
Message 9 of 13
DallasLoanGuy
Super Contributor

Re: PMI for Dummies, please!

pmi is much less on fha for the higher LTVs
 
Retired Lender
Message 10 of 13
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