Updated HSH Calculators Account for Changes in PMIby Tim Manni
It has been a rough couple of years for the private mortgage insurance (PMI) industry. First off, from about 2003 to 2006, the increasing presence of piggyback loans — a loan structure that allows borrowers to finance a down payment by taking out a second mortgage — severely diminished PMI’s presence and influence in the marketplace. Secondly, the housing crisis which began at about 2006, resulted in the failure of countless PMI loans. The combination of PMI’s decreased market share and failed loans crippled the industry.
Lately, the PMI industry is being stunted by tight lending restrictions. Many (perhaps most) lenders refuse to lend money unless borrowers can put 20% down (which naturally negates the need for PMI). If you’re at all still curious to why thousands of homes across the country sit unsold and vacant, a 20% down payment on a $200,000 loan is $40,000. “That’s a huge nut to cover,” says HSH VP Keith Gumbinger.
Like other insurers (and banks), PMI firms were forced to increase their premiums in order to raise capital. As those premiums increased, so did the cost of PMI for consumers.
You can learn more about PMI in our Library (scroll down to ” Private Mortgage Insurance”). And to to find out what PMI will cost you these days, be sure to check out our enhanced and updated “Private Mortgage Insurance” calculator and our “PMI & Loan Amortization Schedule” calculator.
To see our entire list of financial calculators, click here.