How Do I Calculate Mortgage Insurance?

First, you need to determine the value of your property. If you are still considering potential homes to purchase, you can use your anticipated purchase price. The value of your property is important because it is necessary to calculate your loan-to-value ratio, or LTV. The loan is calculated as the current outstanding balance on your loan. To calculate LTV, consider the following example. If your house is worth $500,000 and your down payment is only $25,000, then at closing you will initially owe your lender $475,000. Your LTV in this scenario would be:

475,000 / 500,000 = 0.95, or 95% LTV

You should check your lender's PMI table. Lenders use a chart to determine how much PMI you will need to pay depending on current LTV. You can use this rate to determine your monthly payments for PMI based on current LTV ratio.

Tellus TIP:

You should keep in mind that the higher your loan-to-value ratio is, the more your mortgage insurance will cost. Additionally, the type and length of your loan can also have an impact on the size of your mortgage insurance premiums. Generally, the shorter the loan is, the lower your mortgage insurance rates will be.