Should I Pay PMI or Take a Second Mortgage?

Real estate portals like Zillow, Trulia, Realtor. Property Taxes based on. In this scenario, you take out a primary mortgage for 80 percent of the selling price, then take out a second mortgage loan for 20 percent of the selling price. You get a side-by-side comparison showing you what you can save each month and what you can save in the long run. These features are turned off by default on the mobile version to save screen space.

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Free personal loan calculator that returns the monthly payment, real loan cost, and the real APR after considering the fee, insurance, and interest of a personal loan. Also experiment with other loan calculators, or explore hundreds of calculators addressing other topics such as math, fitness, health, and many more. Check out the web's best free mortgage calculator to save money on your home loan today. Estimate your monthly payments with PMI, taxes, homeowner's insurance, HOA fees, current loan rates & more. Also offers loan performance graphs, biweekly savings comparisons and easy to print amortization schedules. Our calculator includes . Today's Interest Rates and Financial Advice: Compare CD, Mortgage, Car Loans & Bank Interest Rates.

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Because you also enter the property value, the calculator can let you know if you're going to need PMI or not. If you do, it calculates the length of time you'll need to have PMI based on the regular amortization of the loan; that is, over the course of time through making regular payments. PMI is required if you make a down payment of less than 20 percent or have less than 20 percent equity when refinancing; it may be canceled once you exceed 20 percent equity.

The last of these is used to determine if you need to pay for PMI or not, and if so, how long you will need to carry it. It's ok to estimate these last three if you don't have exact figures, but the more accurate these figures are, the more accurate your monthly mortgage payment calculation will be.

You can get property tax information from the clerk's office of the community the home is located in and an estimate for homeowner's insurance from any insurance company. PMI varies according to your credit score and the size of your down payment, but is usually an annual charge of 0. For a more precise estimate, you can look up the "PMI rate charts" or "PMI rate tables" that many mortgage insurance companies maintain online. There are several ways to use the standard Mortgage Payment Calculator aside from simply determining what a mortgage refinance of a certain amount and interest rate will cost you.

You can vary the interest rate slightly to see the impact of rate fluctuations and how much you might save or pay more if rates change before you lock your rate.

You can vary the loan amount to see how changing the size of your down payment would affect your monthly payment. You can compare monthly payments for different homes at different prices. You can also see how shortening or lengthening the loan term the time it takes to pay off the mortgage affects the monthly payment.

Because shorter-term mortgages have lower rates than longer ones do, and paying off a loan faster reduces interest compounding, the monthly payments for a shorter-term mortgage may be less than you expect. This site uses cookies to offer you a better browsing experience. Another way to get out of paying private mortgage insurance is to take out a second mortgage loan, also known as a piggy back loan.

In this scenario, you take out a primary mortgage for 80 percent of the selling price, then take out a second mortgage loan for 20 percent of the selling price.

Some second mortgage loans are only 10 percent of the selling price, requiring you to come up with the other 10 percent as a down payment.

Sometimes, these loans are called loans. With a second mortgage loan, you get to finance the home percent, but neither lender is financing more than 80 percent, cutting out the need for private mortgage insurance. There are many advantages to choosing a second mortgage loan rather than paying PMI, but the ultimate choice depends on your personal financial circumstances, including your credit score and the value of the home. Be sure to check with your accountant to see if the second mortgage is deductible as many second mortgage loans are issued as home equity loans or home equity lines of credit.

With credit lines, once you pay off the loan, you still have a line of credit that you can draw from whenever you need to make updates to the house or wish to consolidate your other debts. Dual purpose loans may be partially deductible for the portion of the loan which was used to build or improve the home, though it is important to keep receipts for work done. The drawback of a second mortgage loan is that it may be more difficult to qualify for the loan and the interest rate may be higher than your primary mortgage.

Most lenders require applicants to have a FICO score of at least to qualify for a second mortgage, compared to for a primary mortgage.

Ultimately, cold, hard figures will best help you make the decision. Our calculator can help you crunch the numbers to determine the right choice for you. We compare your annual PMI costs to the costs you would pay for an 80 percent loan and a second loan, based on how much you make for a down payment, the interest rates for each loan, the length of each loan, the loan points and the closing costs. You get a side-by-side comparison showing you what you can save each month and what you can save in the long run.

In addition to getting around PMI payments, some other common reasons people get a second mortgage include:.

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NAB's Mortgage Calculator allows you to calculate what your loan repayments could be based on the type of loan you choose. Mortgage Calculator: Figuring Out What You Can Afford. Buying a home is a huge investment, and the decisions you make now could . The above mortgage loan information is provided to, or obtained by, Bankrate. Some lenders provide their mortgage loan terms to Bankrate for advertising purposes and Bankrate receives compensation.

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