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Mortgage Insurance Calculator

Mortgage Insurance Versus Higher Rate

Who This Calculator is For: Borrowers trying to decide whether they should elect
to pay mortgage insurance on a fixed-rate mortgage, or avoid mortgage
insurance by paying a higher interest rate.

What This Calculator Does:This calculator compares the after-tax interest cost of a
fixed-rate mortgage on which the borrower pays for mortgage insurance with
that of a higher interest rate mortgage on which mortgage insurance is avoided.

Enter the Following Information:
   Is This Loan for the Purchase of a Property or a Refinance?
  Loan Term (in years)
  Income Tax Bracket ( e.g. 27 )
  Expected Years in House, Cannot Exceed Term
  Optional:  Expected Rate of Property Value Appreciation
  What Do You Expect Your Down Payment to Be?
  Will Mortgage Insurance be Deductible for You? Yes      No  
Interest Rate
  Mortgage Insurance (Monthly Premium Plan)
  Interest Rate  (e.g. 7.50)
  Points  (e.g. 1.5)


Read What the Mortgage Professor Has to Say About
Whether It Makes Sense to Pay a Higher Interest Rate
in Order to Avoid Mortgage Insurance

Design & Programming by Go to DecisionAide Analytics Home Page

This is your marginal tax rate, the rate at which each additional dollar of income will be taxed. If you pay only Federal income taxes, it is the highest tax bracket you used when you calculated your taxes. Federal tax brackets currently are: 10%, 15%, 25%, 28%, 33%, and 35%. If you also pay state and/or local income taxes, these marginal rates can be added to the Federal rate. For example, if you had to pay 25% to the IRS and 5% to the state of Pennsylvania, your tax bracket is 30%. To perform a "pre-tax" analysis enter zero (0) as the tax rate. Mortgage Insurance is now tax deductible if your income is $100,000 or less for a couple, $50,000 or less for a single person. The period cannot exceed the shortest mortgage term. The period may be stated in fractions. For example, 25 years and 1 month would be entered as 25.083, 25 years and two months would be 25.167, and 25 years and 3 months would be 25.25, etc. This affects the after-tax analysis because on a purchase transaction points are fully deductible in the first year whereas on a refinance the deduction must be spread over the life of the loan. Interest cost may change with the length of time you stay with the mortgage. Down payment as a percent of sale price or property value, whichever is lower. If you enter a value, mortgage insurance will be terminated when the loan balance equals 80% of the appreciated value of the property. Given the down payment and term you have selected, the numbers shown are typical annual premium rates for "monthly premium plans" that involve no upfront premium. You can override these numbers if you are quoted different rates for monthly premium plans.