The Motley Fool Discussion Boards
Personal Finances / Buying or Selling a Home
|Subject: Re: Borrower vs. Lender paid PMI||Date: 4/16/2013 4:24 PM|
|Author: crackdclaw||Number: 125094 of 128075|
Can anyone tell me whether Borrow or Lender Paid PMI.....
Well, AJ just provided a fantastic analysis and I would agree with everything she outlined. You do know, this would have been a fair question to ask of the lender who provided the quotes. I suggest you ask your lender, see if they nail it as accurately as AJ. Also, I pulled up rates, and the difference I'm seeing is only a quarter point in rate for the two options. Not sure why your lender is showing a 5/8ths spread of 3.5 to 4.125 for the two options. While the loan amount drives that to some extent, it's rare to see that big a change in rate.
If I go with Borrow Paid PMI, I will pay $30 extra per month
If I go with Lender Paid PMI, I will pay $100 extra per month for the life of the loan.
The borrower paid MI comes to $640. + $70. or $710. The lender paid MI with the higher rate comes to $691. Add your extra payments and you are at $740. / $791. I understand, eventually the MI drops off, but your calculations for mailing in extra to reduce principal are off. AJ showed how much of each first payment goes toward