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Home » Exchange Calculators » What is Better: take a Second Loan or Pay PMI?

What is Better: take a Second Loan or Pay PMI?

Input Information
Property Information
Home Value :
($)

Additional Information
Annual PMI :



Down Payment :




Standard
80% Loan
Second Loan

Interest Rate :
(%)
(%)
(%)

Length :
Yrs
Yrs
Yrs

Points :
(%)
(%)
(%)

Closing Costs :
($)
($)
($)





Financial Analysis (Switch to Plain English)
Standard
80% Loan
Second

Points Value :
$2,700.00
$3,600.00
$300.00

Closing Costs :
$1,200.00
$700.00
$1,000.00

Total Closing Costs :
$3,900.00
$5,600.00

Down Payment :
$30,000.00

Upfront Cost :
$33,900.00
$35,600.00

Amount Financed :
$270,000.00
$240,000.00
$30,000.00

Monthly PI :
$1,449.42
$1,216.04
$253.16

Months With PMI :
78
0
0

Monthly PMI :
$112.50
$0.00
$0.00

Monthly Payment :
$1,561.92
$1,469.20

Total Interests Paid :
$251,790.62
$213,344.38

Total PMI :
$8,775.00
$0.00
$0.00

Total Payments :
$530,559.60
$483,338.57

Plain English Help (Switch to Financial Analysis)

When you take out your home mortgage loan, you might want to consider taking out an 80/15 loan in order to avoid PMI. By going this route, you could potentially save a great deal of money, though your upfront costs may be a bit more.

Pretend the home you are interested in purchasing has a value of $300,000.00 and you are prepared to put down $30,000.00 as a down payment. With a standard 30 year loan with an interest rate of 5.000% and 1.000 point(s), you will have to pay $33,900.00 up front for closing and would have a monthly payment of $1,561.92. In the end, you will have paid $530,559.60 toward your home.

If you opt for an 80/15 loan, you can avoid making PMI payments altogether. Because it involves taking out two loans, however, you will have to pay a bit more in upfront costs. In this scenario, that amounts to $35,600.00.

Your monthly payments, however, will be slightly LESS at $1,469.20.

And, in the end, you will have paid only $483,338.57 – that’s a total SAVINGS of $47,221.03!