This **mortgage insurance calculator** can estimate the mortgage insurance payment and the monthly loan payment (principal + interest) you will owe. There is in depth information on how to calculate these payment details below the form.

## How does this mortgage insurance calculator work?

This financial application can help when trying to approximate your monthly effort on your mortgage insurance and on loan payment together with some other relevant details such as: total interest paid, total paid, annual mortgage insurance and total number of payments.

The variables you have to provide for this calculation are:

- Home price (HPR) which is the amount you are about to pay for the property;
- Desired loan amount (DLA) – is the amount you intent to borrow (usually this is the amount that result by subtracting the down payment form the house price);
- Loan term (LTM) in years;
- Interest rate (IRT) which is considered as fixed over the time frame specified.

Please note that considering the data from the above first 3 figures (home price, desired loan amount, loan term) the mortgage insurance calculator approximates and suggests an Annual mortgage insurance percent (AMP) which is further on used within the model.

The algorithm behind this *mortgage insurance calculator* applies the formulas explained here while displaying the following results:

- Monthly mortgage insurance payment (A) = (AMP * 0.01 * DLA) / 12

- Annual mortgage insurance payment (B) = AMP * 0.01 * DLA

- Monthly mortgage payment (C) = (DLA * (IRT/1200) * ((1 + IRT/ 1200)^(LTM * 12))/((1 + IRT / 1200))^(LTM * 12) - 1)

- Total paid for the mortgage (principal + interest) (D) = C * Loan term * 12

- Total interest paid for the mortgage (E) = D – DLA

- Loan to value (LTV) (F) = DLA / HPR

- Total number of monthly mortgage payments (G) = LTM * 12

## Understanding the role of the mortgage insurance

Mortgage Insurance which is also known as home loan insurance or as mortgageguarantee is a type of insurance policy contract which is paid by the owner of the property bought by mortgage loan, and that aims to protect lenders for losses in case of a default on the loan.

Depending upon the insurer, this financial product can be either public or private.

The treatment and its policies vary from one country to another. For instance within United States private mortgage insurance is requested by the lender when the down payment level is below 20%, while its quotes can vary from 0.32% to 1.20% per year applied to the amount effectively borrowed through the loan. Basically the cost of the mortgage insurance depends on factors such as:

- loan-to-value (LTV) percentage;
- credit score of the borrower;
- interest type (fixed or volatile).

The payment frequency can be either monthly, annually of through a single lump sum, or even in some cases a combination of any from the previous values.

## Example of a calculation

In case of a home price of $200,000 if an individual wants to borrow $150,000 over 25 years at a constant interest rate of 4.5% the following figures will be displayed:

■ Monthly mortgage insurance payment = $162.50

■ Annual mortgage insurance payment = $1,950.00

■ Monthly mortgage payment = $833.75

■ Total paid for the mortgage (principal + interest) = $250,124.62

■ Total interest paid for the mortgage = $100,124.62

■ Loan to value (LTV) = 75.00%

■ Total number of monthly mortgage payments = 300.00

■ Estimated mortgage insurance percent (MIP) = 1.30%

23 Feb, 2015 | 0 comments
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