 TITLE: Do You Really Need Mortgage Insurance? CONTENT: How Is Mortgage Insurance Calculated?\n-------------------------------------\nPaying mortgage insurance or funding fees instead of coming up with a large sum of cash for a down payment can be compelling. You may not want to wait many months or years to bid on your dream house. But before you decide, examine the numbers closely. With insurance or similar fees, the monthly payments will be higher than if you made the standard down payment, and the final costs can be extreme. You'll pay PMI premiums until you reach 20% to 22% equity.\nHere's how much to buy a home with PMI. Imagine the loan is $200,000, comes with a 30-year term and has an interest rate of 4%. The mortgage insurance is calculated at 1.5%:\n*   You would have 88 PMI payments of $235\n*   Your mortgage payment plus PMI would be $1,133\n*   The total PMI costs would be $20,680\n*   After the PMI is removed, your mortgage payments would be $898\nOn the other hand, if you gave the lender the full 20% down payment ($40,000):\n*   There would be no PMI costs\n*   Your mortgage-only payment would be $764\nHome prices can be far greater than $200,000, so the larger the mortgage and the less you offer as a down payment, the higher those costs will be. To make matters worse, the premiums or fees do not go toward the loan's balance. Run your own numbers in a mortgage calculator prior to entering into such an agreement, and ask yourself if it's truly worth it. END