I'm considering purchasing a house, but I'd like to put as close to 10% down as possible, so I still have money left after the down payment for closing costs and for renovations and repairs. Unfortunately, the cost of paying PMI is pretty steep.
I've seen occasional and tantalizing references (e.g. on BankRate and Mortgage Professor) to something called Single-Financed Mortgage Insurance. Instead of paying a monthly premium for four or five years, your lender purchases mortgage insurance as a single one-time purchase when you take out your mortgage, and then adds that single premium payment to the balance of your loan. From what I understand, this is cheaper for the same reason that paying your entire auto or renter's insurance premium in the beginning of the year is cheaper than paying monthly - because there are no installment charges or finance fees charged by the insurance company. Additionally, the cost of the PMI is spread out over the entire life of your mortgage instead of concentrated in the first four or five.
My mortgage payments would therefore be slightly higher than with monthly PMI, but in the scenarios I ran, they're about $30 higher per month, as opposed to the $200 that conventional monthly PMI would cost me - so I'm still saving a lot of money on a monthly basis. Some of these plans also include a rebate provision, so that if your home reaches 80% LTV ahead of time (because of prepayment or a higher appraised value), you can ask your lender to rebate you back any remaining PMI premiums.
This seems exactly perfect for us, but I don't see many references to it on the Internet or in mortgage books/articles. Is it a service that's not often available, or is it just something that's not well-advertised but easily taken advantage of?