80/20 Mortgage vs. Private Mortgage Insurance

A so-called piggyback loan can let you get away without a PMI.

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Property Information
Home Value :		($)
Additional Information
Annual PMI :		($) (%)
Down Payment :		5 % 10 % 15 %
	Standard	80% Loan	Second Loan
Interest Rate :	(%)	(%)	(%)
Length :	Yrs	Yrs	Yrs
Points :	(%)	(%)	(%)
Closing Costs :	($)	($)	($)
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When taking out a mortgage, you might find it very useful to consider taking out an 80/15 loan in order to avoid PMI. It could potentially save you a great deal of money, even though the upfront costs may be a little bit higher. Assume the property you are interested in has a value of $300,000.00 and you are prepared to spend $30,000.00 as a down payment. With a standard 30-year loan at 5.000% and 1.000 point(s), you will have to pay $33,900.00 upfront for the closing and $1,561.92 every month from the day on. In the end, you will have paid $530,559.60 for your home. If you opt for an 80/15 loan, you can avoid making PMI payments altogether. It may, however, require higher upfront costs, as two loans are to be taken out. For this scenario, we are talking about $35,600.00. Your monthly payments, however, will be slightly LOWER at $1,469.20. At the end of the day, you will have paid only $483,338.57, i.e. you will SAVE $47,221.03 altogether!