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Why do the Taxes and Insurance seem to double with 3% down, as opposed to 20% down?

House costs 174,000 dollars.  With 20% down, the Estimated Monthly Payment for taxes and insurance is $187.  However, with 3% down, the taxes and insurance climb to $352!  Why is this?
  • December 09 2012 - Nashville
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Answers (2)

Best Answer

The taxes and home owners insurance do not change - they are roughly based on the value of the home and a few other factors.  What does change is Mortgage Insurance.  If you put anything less than 20% down you will have to pay Mortgage Insurance (called MIP, MI or PMI) which is essentially foreclosure insurance for the bank.  That will go away after a certain number of years or you can have it removed when the balance of the loan is ~75% of what the home is worth, but you'll have to pay for an appraisal at that time to prove it.
  • December 09 2012
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Just goes to show the online estimates are just not accurate.  In real life the taxes will not change due to the down payment nor would the insurance. When online remember, you get what you pay for and if it's free it is worth every cent you pay for it. IE: Nothing!

tim
  • December 09 2012
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