) loans became the primary option for low-down-payment consumers, and its volume grew by more than 355% from 2007 to 2009.
However, in recent years, as the cost of FHA loans
have increased significantly and the housing market has rebounded in many areas, private mortgage insurance has once again become a more viable and affordable option for many consumers, according to a new report from WalletHub
The 2014 Mortgage Insurance Report from WalletHub showed that having to pay mortgage insurance through the FHA versus private mortgage insurance costs borrowers as much as $12,000.
A borrower now has to pay $17,398 in premiums during the first five years after the purchase of a median-price home ($212,100), compared to just $9,210 in 2008.
Many consumers with down payments below 20% can save $2,251 to $12,026 in just five years by choosing private mortgage insurance.
“Although some PMI companies will now insure 97% LTV loans, only 12% of banks offer conventional loans with such a low down payment,” according to the report. “New mortgage guidelines are expected to significantly increase the availability of such offers.”
Unlike private mortgage insurance, FHA premiums continue to be assessed throughout the life of a loan, even if the loan to value ratio drops below 80%. WalletHub also found that four of the largest private mortgage insurance companies charge the exact same amounts for the majority of their customers – that’s among Genworth, Radian, MGIC, and Essent.
Private mortgage insurance was hard to come by in the years following the housing market collapse, as the companies that offer it incurred significant losses, with several even going bankrupt. Federal Housing Administration's (