 TITLE: What Is Private Mortgage Insurance? CONTENT: How Much Does PMI Cost?\n-----------------------\nThe cost of PMI depends on the provider, the size and type of loan and, potentially, your debt-to-income (DTI) ratio. Premiums increase with the amount of coverage required, and PMI on adjustable-rate mortgages is more expensive than on fixed-rate mortgages.\nPMI can cost as little as one-half point (0.5% of the total loan amount) to more than two points (2% of the total loan amount) per year. PMI payments can be structured in one of the following ways:\n*   **Monthly**: The most common PMI payment arrangement divides your annual PMI premium into 12 monthly payments, which are added to your monthly mortgage bill.\n*   **Upfront**: You pay for PMI in a lump sum as part of your closing costs. This lowers your monthly payments, but if you sell the home within a relatively short time, you could lose money on the deal, since the lump-sum payment is non-refundable.\n*   **Split premiums**: You purchase a portion of the PMI policy upfront and cover the rest in payments added to your monthly mortgage statements. This is fairly uncommon, but you can request it if you'd prefer to lower your monthly payments in exchange for higher closing costs.\n*   **Lender-paid PMI**: The lender covers the PMI premium, but shifts the cost to you in the form of higher interest rates. This is the least desirable form of PMI for the borrower, as there is no way to cancel it (or get rid of its cost) over the life of the loan. Lenders often insist on this arrangement when borrowers have poor credit. END