Which is better... a 80/20 30 year fixed morgage with no morgage insurance, or a traditonal 30yrfixed w/mpi?

Question

Which is better... a 80/20 30 year fixed morgage with no morgage insurance, or a traditonal 30yrfixed w/mpi?

Answer 1

Mortgage insurance is what a lender typically requires when there is less than 20% down. They do this in the event they end up foreclosing on that loan, the mortgage insurance company pays them the difference from 80% LTV to the amount they had to foreclose upon. So, if you have 20% down, having mortgage insurance would be moot. Besides, PMI (or MIP, depending on the loan type) only benefits the lender, not the borrower

Answer 2

If you can afford the 20% down, always go with no PMI. PMI sucks.



That said, I wouldn't take a 30-year fixed mortgage unless I was planning on living there a long, long time. If you think you will be moving in <7 years, consider an ARM with a fixed rate for the amount of time you will be living there.



-->Adam

Answer 3

It's not really that simple without knowing what your loan size is, and what your loan program is going to be. For smaller loans, it's probably better to pay the PMI, especially if you qualify for a program with reduced PMI, such as MyCommunityMortgage or FHA. For larger loans, it is often better to do the 80/20, but again, I would need more information to be accurate.

As far as PMI being tax deductible, it is, at least for 2007. Congress has to renew that law every year, and there's no guarantee that they will do so, so I wouldn't bank on that.

Answer 4

Are you able to get 20 lender at this market condition?? With which lender are you working and what is the rate?

Mortgage insurance is nothing more than wastage of money. You should be saving with 80/20 if you have good rate in 2nd mortgage. Recent market condition has caused many lenders close the 2nd mortgage. Who does, charges rates like 12%.

A good rate for 2nd was approx. 8%. If you try to pay towards more prinicpal on 2nd and pay all as earliest, you will be enjoying low interest rate on 1st mortgage after that. That will decrease your monly payment too once you paid off 2nd.

Answer 5

it would depend on the market where the home is located. if the value of you home goes up and/or you pre-pay your mortgage you can refinance once you have reached the 20% equity mark to get out of pmi, but there are the expenses of refinancing ad who knows what rates will be doing when you get to that point.



on the other hand, an 80/20 will give you a little more tax write off.

Answer 6

30 year fixed with PMI.....PMI is now tax-deductable and previously wasn't.



You'll pay a higher interest rate on the 20% mortgage and that is usually slightly more than the PMI payment.



It used to be an advantage to make the higher payment on the 20% to get the tax deduction, and overall, it used to be cheaper....but not anymore.

Answer 7

If you can save the 20%. Do so. You save lots of money with no PMI. And a lower interest rate. Unless of course you like giving money away.

Answer 8

the 80/20 will save you the pmi i recomend the 80/20

Answer 9

its pmi, and you should save up a down payment instead of trying to mortgage the whole property

Answer 10

30yr fixed w/pmi



your rate should be better therefore saving thousands in interest over time.

Answer 11

Neither. Middle and lower class families make me chuckle.