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When you take out your home mortgage loan, you might want to consider taking out an 80/15 loan in order to avoid PMI. By going this route, you could potentially save a great deal of money, though your upfront costs may be a bit more. Pretend the home you are interested in purchasing has a value of $150,000.00 and you are prepared to put down $30,000.00 as a down payment. With a standard 30 year loan with an interest rate of 6.000% and 1.000 point(s), you will have to pay $32,400.00 up front for closing and would have a monthly payment of $719.46. In the end, you will have paid $259,002.25 toward your home. If you opt for an 80/15 loan, you can avoid making PMI payments altogether. Because it involves taking out two loans, however, you will have to pay a bit more in upfront costs. In this scenario, that amounts to $33,500.00.
Your monthly payments, however, will be slightly LESS at $608.02.
And, in the end, you will have paid only $218,885.78 – that’s a total SAVINGS of $40,116.47!
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