TAX ADVANTAGE MORTGAGE INSURANCE?

mchugbl · Joined: 19 Feb 2008 Posts: 1 1.50 Dollars($)

hi, countrywide has come up with this 'TAMI" program where you dont have to pay mortgage insurance for not putting 20% down....i was given a 5.5 fixed for 30 years with PMI or 6.25 rate fixed with no extra PMI along with my Principal and interest......my question is if anybody knows how this works....is it a good idea to get it even though the 6.25 is a higher rate but i dont have to pay PMI with my Principal and interest.......so at 5.5% my P&I is 1564 + 213.51 PMI = 1777 but with the 6.25% rate i only pay P&I of 1696 which if you add up will save me $81/month they said.....anyone knows if this is a good move? let me know i really need to know the catch even though they of course say that there's no catch at all.....i know after 80% ltv i wouldnt be able to get my PMI out coz i dont have one at that 6.25 so im like stuck at 1696/month p&i but with the 5.5 ill be able to take it out if my ltv is at 80% which will leave me at 1564 for my P&I......somebody please answer.....thanks

sara · Posted: Tue Feb 19, 2008 9:20 pm Post subject: RE: mortgage insurance

Hi Mchubl,

Welcome to the forums.

I think you should go with the one that gives you more savings. I think the 5.5% rate is better because you'll be paying lower interest over the term of the loan. You need to compare the monthly payments with the 2 rates, with and without PMI.

Take Care

helping_user · Posted: Tue Feb 19, 2008 10:55 pm Post subject: RE: loan with and without pmi

Hi Mchuqbl,

Let's consider the two scenarios as Case I and Case II

Case I :

Loan term = 30 years
Rate = 5.5%
Monthly payment = $ 1564 (P + I)
PMI = 213.51
Total Monthly payment = 1777

Now, through calculations, your principal loan amount comes out to be $ 275454.

So, Principal = $ 275454
20% of the principal = 55090.8
You can cancel PMI when you've paid down 20% of equity
Remaining balance = $ 220363.20

Now, you can calculate the time period after which you can get 20% equity or when your ltv will be 80% .

Using the FRM Calculator, you can see that after 131 th payment, remaining balance is 220387.75 .

So, till the 131th payment, you've paid = 131*1777 = 232787

Thus, total payment for the entire loan term = 232787 + 229*1564 = 232787 + 358156 = 590943

Now for Case II:

Loan term = 30 years
Rate = 6.5%
Monthly payment = $ 1696 (P + I)
PMI = 0
Total payment for the entire loan term = $ 610560 (1696*12*30)

So, you will save dollars if you go with the first offer at 5.5%

Your savings = $ 610560 - 590943 = $ 19617

I hope this will help you.

Thanks.

charlesarmbruster · Posted: Wed Feb 20, 2008 12:00 pm Post subject:

It's all up to you, my friend!

If you require a lower monthly payment, go with the lower payment. You can refinance in the future, if needed or wanted.

If you are looking at the 'long haul', pay more now, as long as you qualify. Simple! These lender-paid Mortgage Insurance products for over 80% LTV are very popular -- but, they do make money for the lender! The lenders are taking money from the Mortgage Insurers by assuming the 80+% risk which they have insured in the past.

I always tell clients to consider their own circumstance -- pay what you can afford, or live in a less expensive home. Remember, a home is what you make it! No matter what the cost!...or the price!

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