This Colorado mortgage calculator can be used to estimate the monthly payments of a home mortgage loan, based on the home’s sale price, the term of the loan desired, buyer’s down payment percentage, and the loan’s interest rate. This calculator factors in PMI (Private Mortgage Insurance) for loans with less than 20% down payment. Also taken into consideration are the property taxes, and their effect on the total monthly mortgage payment.
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PMI will cost less if you have a larger down payment (and vice versa). If a borrower puts 3% down versus a 10% down payment, it means many more months of making PMI payments to the bank.
A borrower’s credit score is a numerical representation of a person’s creditworthiness, and the ability to pay back a loan on time and in full. A credit score can range from 300 to 850 and is based on a person’s credit history, which includes the number of late payments and the total amount of debt outstanding. The higher the score, the more creditworthy a borrower appears to banks and mortgage lenders. As a result, the higher the credit score, the lower the PMI premium.
Potential for property appreciation
If you live in a market with declining property values, your PMI premium might be higher. Conversely, if you live in an area where home values are appreciating, the value of the home could increase enough for you to stop the PMI payments. A new home appraisal would be needed, but if the value has risen over 20%, for example, you would no longer need to pay PMI.
Different loan types can come with different PMI rates. A conventional mortgage, which is a loan issued by a bank, might have a higher PMI than an FHA loan. An FHA mortgage is so called because it is insured by the Federal Housing Administration (FHA). FHA mortgage loans are issued by FHA-approved lenders and are designed to help first-time homebuyers and those with low-to-moderate incomes.
Conventional mortgages will require PMI up until there is an 80% LTV, from either a 20% down scenario, or the loan has been paid down over time, or the value of the property appraises higher in the future.
PMI for FHA loans will remain with the loan for the entirety of the loan life, regardless of future LTV (loan-to-value).
If the financed property will be owner-occupied (you will be living there), your PMI premium will be lower than if it is a rental or an investment property.