Q&A for How to Calculate Mortgage Insurance (PMI)

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My house appraisal value was 410000, but the purchase price is 400000, so to cancel the insurance, which value will be used?

Carla Toebe
Real Estate Broker
Carla Toebe is a licensed Real Estate Broker in Richland, Washington. She has been an active real estate broker since 2005, and founded the real estate agency CT Realty LLC in 2013. She graduated from Washington State University with a BA in Business Administration and Management Information Systems.

Carla Toebe

Real Estate Broker

Expert Answer

Current market value is used. It must be a recent appraised value by a certified appraiser or a current market analysis provided by a Realtor, and the lender will choose who will do this when you request a removal of this insurance.

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Question

How do I calculate title insurance?

Michael R. Lewis
Business Advisor
Michael R. Lewis is a retired corporate executive, entrepreneur, and investment advisor in Texas. He has over 40 years of experience in business and finance, including as a Vice President for Blue Cross Blue Shield of Texas. He has a BBA in Industrial Management from the University of Texas at Austin.

Michael R. Lewis

Business Advisor

Expert Answer

The cost of Title insurance varies from state to state, insurer to insurer, and depends upon whether you are covering both the lender's risk and the owner's equity in the property. You can expect to pay 04% - 0.8% of the mortgage value for the insurance.

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Question

When you have reduced the original loan amount by 20%, you can drop the PMI?

Michael R. Lewis
Business Advisor
Michael R. Lewis is a retired corporate executive, entrepreneur, and investment advisor in Texas. He has over 40 years of experience in business and finance, including as a Vice President for Blue Cross Blue Shield of Texas. He has a BBA in Industrial Management from the University of Texas at Austin.

Michael R. Lewis

Business Advisor

Expert Answer

Yes, ask the lender to cancel PMI when you have reduced the mortgage amount to 80% of the original appraised value. By law, the lender must automatically cancel PMI when the mortgage amount reaches 78% of appraised value.

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If I buy a house appraised at $250000 for $225000 and put down $25000 what is my LTV? It seems that this would give me 20% equity .

Carla Toebe
Real Estate Broker
Carla Toebe is a licensed Real Estate Broker in Richland, Washington. She has been an active real estate broker since 2005, and founded the real estate agency CT Realty LLC in 2013. She graduated from Washington State University with a BA in Business Administration and Management Information Systems.

Carla Toebe

Real Estate Broker

Expert Answer

That is correct.

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How do you determine the coverage amount? i.e. 25 or 30%

Carla Toebe
Real Estate Broker
Carla Toebe is a licensed Real Estate Broker in Richland, Washington. She has been an active real estate broker since 2005, and founded the real estate agency CT Realty LLC in 2013. She graduated from Washington State University with a BA in Business Administration and Management Information Systems.

Carla Toebe

Real Estate Broker

Expert Answer

The coverage amount is based on the loan to value ratio and the level of risk of the borrower and the type of loan.

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