Sample Mortgage Insurance Premiums

August 27, 2010 Note

The mortgage insurance premiums shown below are as of September 12, 2005. They are typical premiums posted by the seven private mortgage insurance (PMI) companies operating at that time. I have not updated them because current premium rates are readily available on the web sites of all the PMIs, but pre-crisis premiums are hard to find.

The post-crisis mortgage insurance premium structure is much more complicated than the one shown below. In addition to the three factors determining premium rates in the table below, post-crisis premiums vary with the borrower's credit score, type of property, whether the property is for investment as opposed to occupancy, whether the borrower is taking cash out of the transaction (on a refinance), and other factors.

Down Payment as Percent of the Lower of Sale Price or Appraised Value, September 12, 2005
0 to 4.99% 5 to 9.99% 10 to 14.99% 15 to 19.99%
FRMs      
30-40 Years .96 .78 .52 .32
25 Years .85 .67 .41 .21
20 Years .80 .56 .23 .19
15 Years .80 .56 .23 .19
ARMs 1      
30 Years 1.17 .88 .61 .33
25 Years 1.06 .77 .50 .22
20 Years 1.06 .77 .50 .22
15 Years 1.06 .77 .50 .22
ARMs2      
30 Years 1.21 .92 .65 .37
25 Years 1.10 .81 .54 .26
20 Years 1.10 .81 .54 .26
15 Years 1.10 .81 .54 .26
     
Notes to the table: ARMs that have 5 years or more of level payments are considered FRMs. ARMs 1 are those with rate adjustment caps of 1% or less. All other ARMs are ARMs2. ARMs2 that allow negative amortization may have higher premiums.

The premiums are for coverage required by Fannie Mae and Freddie Mac. No refunds are available. The premium rates are applied to the original loan balance, and hold for 10 years, after which they fall uniformly to .20% of the original loan balance unless they were already less than .20%, in which case they remain unchanged.

Premiums are annual rates paid monthly. To obtain the monthly premium in dollars, multiply the figure shown in the table by the loan balance and divide by 1200. If the premium rate is .92 and the loan is for $100,000, for example, the monthly premium is $92000 divided by 1200, or $76.67.

Under Federal law, premiums are automatically terminated when the loan balance falls to 78% of the original property value, and may be terminated earlier at the borrower's initiative when the balance reaches 80% of appreciated value.

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