Here are Some Pointers About PMI

[Ralph DiBugnara]

One of the measures of risk that lenders use in underwriting a mortgage is the loan-to-value (LTV) ratio. LTV divides the amount of the loan by the value of the home. Most mortgages with an LTV ratio greater than 80% require that the borrower have PMI.

PMI can cost between 0.5% and 1% of the entire mortgage loan amount annually, which can raise a mortgage payment by quite a bit. Let's say, for example, that you had a 1% PMI fee on a $200,000 loan. That fee would add approximately $2,000 a year, or $166 each month, to the cost of your mortgage.