Is there a mortgage insurance premium charge at closing for conventional loans?
April 17, 2010 by
Filed under mortgage insurance
I know there is a mortgage insurance premium around 1.5% when you close on a FHA loan, but I was wondering if the same charge apply when you close on a conventional loan
SURE, UNLESS you put down 20%, you have to pay PMI because you’re a poorer risk.
Yes, if you pay less than 20% down on a conventional loan you will pay a PMI premium each month. There are some very infrequent exceptions to this, so you can probably count on it.
Make sure your closing documents include the provision somewhere that once your LTV ratio reaches 80% (either through your principal reduction over time, or an increase in the appraised value of your property), you can request that the PMI be cancelled. That will save you each month.
Yes if you don’t put down 20%.
No, there is not a mortgage insurance premium on conventional loans at closing but you will pay monthly mortgage insurance.
AT closing, generally no. I say “generally” because there used to be something called prepaid mortgage insurance for conventional loans – rarely used. But I do not think the product exists any longer. I haven’t heard about it in years.
In the absence of that, you only pay conventional mortgage insurance each month as part of your mortgage payment.
Good luck.