FHA & VA loans have different down payment & loan insurance requirements which are reflected in their monthly payments. Some home buyers take out a second mortgage to use as part of their downpayment on the first loan to help bypass PMI requirements. PMI is only required on conventional mortgages if they have a Loan-to-value (LTV) above 80%. PMI: Property mortgage insurance policies insure the lender gets paid if the borrower does not repay the loan. If property tax is set above 20 the calculator presumes the amount entered is the annual assessment amount. If property tax is 20 or below the calculator treats it as an annual assessment percentage based on the home's price. Real estate portals like Zillow, Trulia,, Redfin, & Movoto list current & historical property tax payments on many properties. One can't simply look at the old property tax payment on a home to determine what they will be on a forward basis, as the assessed value of the home & the effective rate may change over time. Those who rent ultimately pay this expense as part of their rent as it is reflected in their rental price. Property Tax: this is the local rate home owners are charged to pay for various municipal expenses. Extra payments applied directly to the principal early in the loan term can save many years off the life of the loan. If a home buyer opts for a 30-year loan, most of their early payments will go toward interest on the loan. The 30-year fixed-rate loan is the most common term in the United States, but as the economy has went through more frequent booms & busts this century it can make sense to purchase a smaller home with a 15-year mortgage. Loan Term: the number of years the loan is scheduled to be paid over. For your convenience we also publish current local mortgage rates. This calculator can help home buyers figure out if it makes sense to buy points to lower their rate of interest. If the buyer believes interest rates will fall or plans on moving in a few years then points are a less compelling option. In general discount points are a better value if the borrower intends to live in the home for an extended period of time & they expect interest rates to rise. In some cases a borrower may want to pay points to lower the effective interest rate. Interest Rate: this is the quoted APR a bank charges the borrower. If the loan amount is above 80% of the appraisal then PMI is required until the loan is paid off enough to where the Loan-to-value (LTV) is below 80%. Loan Amount: the amount a borrower is borrowing against the home. This is used in part to determine if property mortgage insurance (PMI) is needed. This means that they are lenient in accepting you for the insurance but they are very strict in actually giving you your claim in the case you need the insurance! Any part of the initial medical questionnaire can possibly void your claim if they deem it inaccurate, even if that question has very little to do with your actual claim! You can learn more by watching CBC Marketplace Investigation on Mortgage Insurance.Home Value: the appraised value of a home. This is because many banks and insurance companies have what's called a "Post Claim Underwriting" method of checking your medical history AFTER you file for a claim on your insurance. Make sure to read the fine print about the Mortgage Insurance you consider getting as well as fully understanding every question on the medical overview questionnaire, even it if means going over it with your doctor. To obtain Mortgage Insurance for yourself and not the lender, in the case you can not pay off the mortgage due to loss of job, injury, or death, etc., you would need to obtain separate insurance from a licensed insurance broker or your bank. The idea behind it is to convince the lender that you are not likely to default on the mortgage and willing to pay extra for insurance since you choose to pay less than the minimum down payment to avoid having to pay for PMI. Thus even though the insurance is paid by the borrower, only the lender is covered. The insurance is to provide coverage for the lender in case the borrower can not pay off the mortgage and the lender can not cover the cost of the mortgage by the resale of the property. Note: PMI is usually only required when the down payment is less than 20% of the home value or purchase price.
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