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[quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous]Hi! I am the OP of the credit card payoff and have been offered 5% down, [b]lender paid PMI or no PMI but a higher interest rate[/b].  We're talking with Washington First Mortgage, United Mutual Funding, and Sebonic.  Quicken also offered it to us.

Of course, we haven't made an offer on a house yet, so there are lots of variables here.  [/quote]

It's still PMI, just a different way.  The lender paid PMI is a lump sum that you pay as a "fee" and the lender purchases the MI.  The higher interest rate version builds the PMI into the interest rate the lender is charging you.  [/quote]

I'm the PP.  That's exactly right.  You're still paying more for the bank to loan us money.  But for the amount of time it will take us to save $100,000 for 20% down, it's worth it for us to take the higher interest rate today, if we can find a house! [/quote]

Compare the higher interest rate version with the outright PMI version.  You might find that just paying the PMI (instead of building it into the interest rate) works better for you.

We compared all the options.  We didn't like the interest rate version because you're paying for the life of the loan, so it ends up actually being more.  We didn't like the upfront version either because we knew we wanted to do some renovations to the house.  We also bought an older house and assumed unanticipated repairs would come up, so we were trying to limit the upfront costs.

I believe that your credit score affects the PMI payment you are quoted.  We had excellent credit scores, so our PMI payment was pretty low.   You also get pretty detailed information about when it falls off.  There are options for early removal, but we calculated worst-case scenario (approx. 10 years).  We compared that with the other options, and even taking into account the mortgage interest deduction, we opted for the lower interest rate on a 30-year loan.

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