There are two basic kinds of PMI. Regular PMI is mortgage insurance provided by a third party company and is paid as a fee every month until your equity exceed 20%. LPMI is Lender Paid Private Mortgage Insurance that comes in the form of a slightly higher loan interest rate. So, both kinds will cost you money every month but that expense is different over time. Having a realistic estimate of how long you’ll own the home you’re buying is very helpful in determining which one is a better deal for you.
If you own your home for 4 years the LPMI option will you cost $3,582.72 less and you your monthly payment will be smaller. Alternately, if you live in your house longer than 7 years + 10 months the regular PMI option will begin to save you money.
Admittedly, it can be difficult to estimate how long you may live in a house, but that info will influence what type of Private Mortgage Insurance is a better option.