The amount that the private mortgage insurance costs you depends on several factors:
Type of loan
ARMs will generally have a higher private mortgage insurance premium than FRM’s.
PMI premium is partially based on the percentage of the loan amount as well. This means that the more you borrow the greater will be the amount of your private mortgage insurance premium.
Loan to value ratio, LTV
Loan-to-value ratio is the ratio between the amount you are borrowing and the amounts that the property is actually worth. The greater this ratio the greater the risk of default to the lender hands, higher will be your PMI premium.
Insurance company issuing PMI
This is not very substantial factor because the interest rate between different insurance companies are competitive and very very little from one insurance provider to another.
PMI origination fees and monthly premiums change frequently. You can check with your mortgage lender for more specific information about PMI expenses on your mortgage.
Even though the rates of the PMI and maybe fairly similar between different insurance providers they could differ with different areas, different states are and the market conditions.
Sometimes certain areas that are considered to be distressed property areas where the values of real estate is declining, are charged with a higher private mortgage insurance. Similarly limited documentation mortgages and mortgages with less than 5% down payment will get charged higher origination fee as well as interest on the private mortgage insurance.
If you are in the circumstances which you are making less than 20% down payment on your home and are not liking the fact that you have to pay for private mortgage insurance as well, you should understand that PMI is not a permanent situation.
The day that you can prove that you have more than 20% equity in your property, you can convince your mortgage lender to drop the private mortgage payment from your monthly mortgage payment.. In order to build up a 20% equity in your home, you can either pay down your loan in the future or it can happen automatically following an increase in property prices in your area. You can also increase the value of your property by doing certain improvements such as adding a 2nd bedroom, modernizing the kitchen, re-doing the plumbing and electricity wiring etc.
Getting the lender to remove the private mortgage insurance will probably require that you get the property appraised to establish its current market value. You will have to bear the additional expense of property appraisal but should not cost you more than $200-$300. If the appraisal is successful and you are able to drop the PMI payment from your mortgage payment it could save you hundreds or more in a year