So if you borrow 0,000, you’re paying between 0 and ,500 annually: That’s not chump change.
In fact, here’s a news story I did eight years ago, back when I was wearing a suit and tie on camera.
PMI benefits the mortgage lender, but you pay the premiums.
And unlike virtually any other insurance policy you buy, you don’t get to shop around for the best deal.
The cost varies depending on your credit score and down payment, but it typically ranges from 0.3 percent to 1.5 percent of the original loan amount every year.
But there’s one kind of insurance you might pay for that you’d rather not: private mortgage insurance, otherwise know as PMI.
Here’s this week’s question: I asked JP Morgan Chase if they could stop charging me mortgage insurance. Since when did banks start charging clients for appraisals? – David Private mortgage insurance is simply insurance your mortgage lender takes out to protect against the risk that you default.
I am already getting ripped off for the mortgage insurance. In other words, if your house goes into foreclosure and is sold for less than the mortgage amount. It is typically required if you put less than 20 percent down when you buy a house, and you’ll keep paying it monthly until your equity reaches 20 percent.
I’ve been talking about, and railing about, PMI for many years.
This used to be pleasant for those collecting the premiums, because until the passage of the Homeowners Protection Act of 1998, they didn’t have to let you know that you’d achieved 20 percent equity and no longer had to pay PMI.
Instead, they’d collect your PMI premiums every month for the entire 30 years if you let them.
Now the law requires lenders to cancel PMI when your loan-to-value ratio reaches 78 percent of the original value of your house.