Question:

What are the private mortgage insurance (PMI) rates?

Answer:

Private mortgage insurance (PMI) rates vary according to loan size and do not reflect how big of a risk a consumer is. That is, two borrowers applying for the same loan with the same LTV will be paying the same private mortgage insurance (PMI) rates, even if one is higher credit risk than the other.

How much are the average private mortgage insurance (PMI) rates?

The average private mortgage insurance (PMI) rates are basically 0.5% of the loan amount for a loan with 90% LTV charged yearly, up until private mortgage insurance (PMI) premiums are cancelled.

The Homeowners Protection Act of 1998 requires that lenders effectively cancel PMI premiums upon borrowers' request when 80% LTV is reached and the mortgage is up to date. Also, the lender has to inform the borrower about their right to request PMI cancellation.

According to the Homeowners Protection Act of 1998, lenders are also required to automatically drop PMI premiums when 78% LTV is reached.

Avoiding Private Mortgage Insurance (PMI) Premiums

PMI has long had no tax deductibility and made the loan a lot costlier. To avoid paying PMI, borrowers found many ways to avoid it - they either took a combo/piggyback loan, or accepted a slightly higher rate on the loan. However, currently PMI premiums have full tax deductibility for households with income of up to $100,000 and prorated tax deductibility for households with yearly income of up to $109,000 through 2010. Higher income borrowers get no tax benefit paying PMI.

Mortgage rates hit their lowest since 1955. Ask the home loan experts we recommend Quicken Loans how to take advantage of them.
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