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Special Reports
Downpayment Assistance Programs
PMI eCompare Calculator Shows Loan Differences
By Amilda Dymi
PMI offers the eCompare Calculator, a Web-based tool that allows Realtors
and mortgage brokers a mortgage loan comparison tool.
"The eCompare Calculator shows us that market economics are changing,"
stated PMI executive vice president of sales, field operations and product development, David Katkov upon the launch
of the product earlier this year.
"In 2004 and 2005, we were in a unique economic environment, with record
low interest rates and very high home price appreciation. In that environment, a piggyback, interest-only loan,
or option ARM may have offered a lower payment than a fixed-rate loan with mortgage insurance. Today, with interest
rates going up and home price appreciation slowing, MI is almost always competitive and is often the better deal
for the consumer."
What makes it unique, PMI said, compared to "most mortgage calculators"
is that it includes a variety of MI options "and shows how they stack up next to piggyback loans, which in
recent years have been one of the [MI] industry's fiercest competitors."
Since piggyback loans are second mortgages based on a primary mortgage to secure a downpayment of less than 20%,
in times when a 20% downpayment is no longer the norm, PMI said, homebuyers are increasingly putting less money
down and taking out larger loans. The average downpayment among first-time homebuyers is now at 2%, while almost
50% of all first-time buyers put no money down, according to research data from the National Association of Realtors.
"Our goal was to make a comparison between loan options as fast as possible,
while still providing real information," Mr. Katkov said. "Many people may not realize that [MI] is not
a 'one size fits all' product anymore."
The eCompare Calculator allows users to enter purchase price, downpayment, and loan term data and than shows how
monthly and principal payments through year three compared with five different MI scenarios - such as PMI's Split
Premium and Super Single MI products or the two most common piggyback options.
In today's low downpayment market, the calculator allows users to qualify borrowers for a mortgage with a downpayment
at 3% of the purchase price or even less, allowing many borrowers to choose a traditional 30-year fixed rate mortgage
"that will protect them from rising interest rates and from the huge jumps in monthly payment that are built
into many of the other loan products."
PMI's Split Premium combines an initial MI premium with smaller monthly premiums and the opportunity to finance
the initial premium into the loan. The Super Single product helps avoid monthly premiums since MI premiums are
either paid in full at closing or financed into the mortgage.
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