Quick Answer: How Do You Calculate What My PMI Will Be?

The PMI formula is actually simpler than a fixed-rate mortgage formula.

  • Find out the loan-to-value, or LTV, ratio of your house.
  • 450,000 / 500,000 = 0.9.
  • 0.9 X 100 = 90 percent LTV.
  • Look at the lender’s PMI table.
  • Multiply your mortgage loan by your specific PMI rate according to the lender’s chart.

How do you calculate when PMI will drop off?

Pay Down Your Mortgage

One way to get rid of PMI is to simply take the purchase price of the home and multiply it by 80%. Then pay your mortgage down to that amount. So if you paid $250,000 for the home, 80% of that value is $200,000. Once you pay the loan down to $200,000, you can have the PMI removed.

How do I calculate PMI in Excel?

Enter the monthly PMI fee in cell A4. This fee varies between lenders, so you need to contact the mortgage company to find out the amount they charge. If you only wish to estimate PMI, you can enter “=A3/1500” or “=A3/3700” which calculates PMI based on common formulas. Enter the annual escrow amount in cell A5.

Is PMI calculated on appraised value?

Your lender orders an appraisal of the property after you sign the purchase contract. However, your lender may still require you to buy PMI if your downpayment is less than 20 percent because lenders base loan underwriting and PMI on the lesser of the purchase price and the appraised value.

Can you negotiate PMI?

Private mortgage insurance provides your lender 10 percent of the cost of the loan should you default on the mortgage. You cannot negotiate the rate of your PMI, but there are other ways to lower or eliminate PMI from your monthly payment.

Should I pay off PMI early?

By paying PMI you are reducing the bank’s risk. That is a good thing for you because it allows banks to make loans they otherwise may not have made. And they are able to make them at lower rates than they would have offered without mortgage insurance.

Can lenders waive PMI?

Ending PMI Early

You may also be able to ditch it early by prepaying your mortgage principal so that you have at least 20% equity (ownership) in your home. Once you have that amount of equity built up, you can request the lender cancel your PMI.

Can a new appraisal eliminate PMI?

If you are planning to refinance your mortgage to take advantage of a lower interest rate, you may be able to have PMI removed. This will work if your new mortgage is for 80% or less of the home’s current appraised value. You’ll most likely need an appraisal to refinance your mortgage, anyway.

Can I get rid of PMI if my house value goes up?

Once you build up at least 20 percent equity in your home, you can ask your lender to cancel this insurance. And your lender must automatically cancel PMI charges once your regular payments reduce the balance on your loan to 78 percent of your home’s original appraised value.

How do you get your PMI lowered?

The amount you pay for PMI depends on your credit score and LTV ratio, but could range from $30 to $70 each month for every $100,000 borrowed.

  1. PMI vs. MIP.
  2. Get a new appraisal.
  3. Refinance your mortgage.
  4. Target your principal balance.
  5. Request cancellation.
  6. Wait it out.
  7. Pay a single premium.
  8. Make a larger down payment.

How can I avoid PMI with 5% down?

One way to avoid paying PMI is to make a down payment that is equal to at least one-fifth of the purchase price of the home; in mortgage-speak, the mortgage’s loan-to-value (LTV) ratio is 80%. If your new home costs $180,000, for example, you would need to put down at least $36,000 to avoid paying PMI.

How much PMI will I pay with 3.5 down?

Cost. PMI typically costs between 0.5% to 1% of the entire loan amount on an annual basis. That means you could pay as much as $1,000 a year—or $83.33 per month—on a $100,000 loan, assuming a 1% PMI fee.

Is PMI a waste of money?

PMI return on investment. Home buyers avoid PMI because they feel it’s a waste of money. In fact, some forego buying a home because they don’t want to pay it.

Is it worth refinancing for .5 percent?

Your new interest rate should be at least . 5 percentage points lower than your current rate. The old rule of thumb was that you should refinance if you could get a rate that was 1 to 2 points lower than your current one.

Can I cancel PMI after 5 years?

If your loan balance is 78% of your original purchase price, and you’ve been paying FHA PMI for 5 years, your lender or service must cancel your mortgage insurance today — by law. On a 30-year fixed FHA loan, it will take you about ten years to pay your loan down to 78% of the original purchase price.

Should I refinance to remove PMI?

Besides getting a lower rate, refinancing might also let you get rid of PMI if the new loan balance will be less than 80% of the home’s value. But refinancing will require paying closing costs, which can include myriad fees. You’ll want to make sure refinancing won’t cost you more than you’ll save.

Can I remove PMI with a new appraisal?

If you are planning to refinance your mortgage to take advantage of a lower interest rate, you may be able to have PMI removed. This will work if your new mortgage is for 80% or less of the home’s current appraised value. You’ll most likely need an appraisal to refinance your mortgage, anyway.

How can I get rid of my PMI early?

To remove PMI, or private mortgage insurance, you must have at least 20% equity in the home. You may ask the lender to cancel PMI when you have paid down the mortgage balance to 80% of the home’s original appraised value. When the balance drops to 78%, the mortgage servicer is required to eliminate PMI.