Comparing the Financed Single Premium with the Monthly Premium

Comparing the Financed Single Premium With the Monthly Premium: The increase in monthly payment on the financed single premium plan is less than the monthly premium, but the payment is not everything. The upfront premium is included in the loan amount which must be repaid when you sell your house or refinance the mortgage.

Your decision should therefore reflect the expected total net cost of the plans over the period you expect to have the mortgage. The longer you have the mortgage, the lower is the cost of the financed single premium relative to the monthly premium.

In general, the single financed premium is less costly than the monthly premium if you expect to be in your house for 5 years or longer, but this generalization ignores some factors that could be important in individual cases, including tax savings. To pin it down further, use my calculator 14d, Comparing Mortgage Insurance Options, which pulls together all the factors affecting cost.

Additional Readings:

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