Mortgage Tool Launched by PMI

Most mortgage calculators compare mortgage products, showing the pros and cons of fixed rate and adjustable rate mortgages. PMI now offers eCompare, a calculator that helps brokers and agents offer the best coverage to their borrower. High ratio lending is handled in two ways; mortgage insurance or a piggyback loan. The new calculator shows what the price would be for private mortgage insurance as opposed to a piggyback loan, one of the mortgage insurance industries fiercest competitors. A piggyback is secondary financing that is secured at closing, and used toward a down payment to avoid private mortgage insurance.

Normally, any loan that does not have 20% down is required to have mortgage insurance. Most home buyers in today’s market don’t have 20% down, and are forced to take out larger loans. If a borrower opts to take out a piggyback loan, the rate is often 25% higher than their first-loan rate, averaging 7.5% to 8.5% in today’s market. This can run a consumer’s monthly payment up by more than $300, whereas MI would probably cost $100 for the same coverage. The new calculator from PMI shows the two scenarios side by side, in order to benefit the borrower.