YOU ASK:

How much is mortgage insurance?

WE ANSWER:

Mortgage insurance premiums may vary from company to company, but generally, the premiums are from .3% to 1% of the amount being loaned. The premiums will also depend on the details of the loan, as well as the amount you paid for down payment of the property.

Thus, the insurance is not based on the risk factors presented by an individual, but on the size of your mortgage. It also does not base premiums on credit, but on the person's ability to pay a specific down payment amount. Thus, the computations of the mortgage insurance rates will also depend on how much down payment you made, with respect to the total amount of the loan.

Other factors that affect how your mortgage insurance premiums are computed are as follows:

  • Kind of mortgage, whether it is a fixed-rate mortgage or an adjustable-rate mortgage. If it is an adjustable rate mortgage, the insurance premiums will be higher.
  • Size of the loan, the smaller the loan, the higher the cost per thousand.
  • Number of years it takes for you pay a portion (usually 22%) of the loan.

Private mortgage insurance is paid on a monthly basis, along with your monthly mortgage payments. It is usually the lender that collects the premiums.

One way of saving on the costs of mortgage insurance is to cancel it as soon as you are not required to be covered with the insurance. When your equity in your home increase (you are able to pay a certain percentage of the loan, or the value of your property increases), you no longer need to pay for insurance.

However, you must remember that some lenders don't stop charging for the insurance premiums, so be sure to ask that the insurance be terminated as soon as it is allowable.

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