If you’re thinking of purchasing a home, you might be trying to decide between applying for an FHA loan and taking out private mortgage insurance.
Personal finance site WalletHub recently unveiled its 2014 Mortgage Insurance Report in an effort to help buyers who are making lower down payments.
Some highlights from the report:
- FHA mortgage insurance premiums have almost doubled since 2008. If you purchase a median-priced home now you’ll pay about $17,398 in premiums within the first five years, compared to $9,210 six years ago.
- If you have a down payments less than 20% you can save $2,251 to $12,026 in five years when you choose private mortgage insurance instead of an FHA loan. WalletHub notes that higher credit scores and down payments will yield greater savings.
- FHA premiums continue to be assessed throughout the life of a loan. This is true even if your loan-to-value ratio dips below 80%.
- Four of the largest private mortgage insurance companies charge the same amounts for the majority of their customers.
- The study notes that private mortgage insurance rates have decreased compared to 2013, demonstrating a decrease by an average of 3.36% across all credit scores. Says WalletHub, “The biggest drop (11.36%) has been for buyers with a credit score of at least 760 who are making a 90% LTV purchase.”
For more on this topic, see CFPB Proposes Expanded Foreclosure Protections.