How Mortgage Calculators Factor in Mortgage Insurance

Mortgage Calculator

Do Mortgage Calculators Take Mortgage Insurance Into Account?

Mortgage calculators are helpful tools for anyone considering a home purchase. They allow buyers to easily see how much they can afford and determine how much they can put down to lower their monthly payments. But when using them, it’s important to know if mortgage calculators account for mortgage insurance, which is often required for buyers who put down a less than 20-percent down payment.

Mortgage insurance is necessary when a buyer does not have the full 20-percent down payment on a conventional home loan. Without mortgage insurance, lenders would be unwilling to grant a loan to someone who puts down less than the traditional 20-percent down payment. It’s important to remember that mortgage calculators are not always accurate. If your down payment is not 20-percent and you don’t have mortgage insurance, you cannot rely on the calculator to tell you your total monthly payment.

Mortgage insurance is sometimes known as private mortgage insurance (PMI). It is usually added to the loan and added monthly to your mortgage payment. It can range from 0.3-percent to 1.15-percent of the loan, though it can be lower depending on the size of your loan and the type of loan you have. All lenders are different and it’s important to speak to your loan officer or mortgage brokerto make sure you understand if your mortgage includes PMI and, if so, how much it adds to your monthly payment.

For buyers who put down 20-percent, PMI is not necessary and it’s often not an added fee. Mortgage calculators that do not take PMI into account often factual when you put down 20-percent. However, you will still want to speak to your lender and get all the facts about your loan. Knowing all the details and fees associated with your loan helps you understand how much you will have to pay each month.

There are many different types of mortgage calculators that exist, and each one has its own features and functions. Generally speaking, most mortgage calculators are not designed to factor in mortgage insurance. However, some calculators do have this feature. If you know your down payment will be lower than 20-pecent and you would like to factor in your PMI, it’s important to use the right calculator to ensure your calculations are accurate.

When using a mortgage calculator to get an idea of how much you can afford, it’s important to factor in mortgage insurance if you will not be putting down the traditional 20-percent down payment. You may also speak to your loan officer and get an estimate of the PMI fees. Knowing the full cost of your loan helps ensure that you are making an investment that makes financial sense for you and your family.