August 6th, 2014
For Borrowers who are using Conventional loans and do NOT have 20% down or 20% equity, there is the need for mortgage insurance. But there are two choices and it depends on certain factors as to which is best for that Borrower.1) Traditional mortgage insurance is paid by the Borrower and the price for the mortgage insurance is based on: the loan size, zip code, credit score, and down payment or equity involved. Once 20% equity is built ( 80% of the appraisal or original purchase price), the mortgage insurance can be REQUESTED to be dropped, BUT it will automatically come off at 22% equity ( 78% of the appraisal or original purchase price). Lender paid mortgage insurance is paid by the Lender, and with that in mind the % rate for the loan is usually .25% more, therfore the principal & interest payment will be more for this option for the life of the loan. BUT yet this payment is still usually less than the starting payment of the traditional mortgage insurance option along with the principal & interest at the lower % rate. SO....... depending on the equity in the home when purchased, how quickly equity can be built, how long someone will be in the home and budget considerations may determine which option is really best for Borrowers. Do you want a lower payment NOW with Lender paid mortgage ins., OR an even lower payment once the equity is built up and the mortgage insurance payment can be dropped completely from the traditional method? A good Mortgage Broker and Realtor need to discuss these options with their clienst. FOR EXPERIENCE AND FAIR SERVICE CALL...DIVERSIFIED MORTGAGE BROKERS Tel: 434-237-3143, Email" firstname.lastname@example.org, Web: www.diversifiedmortbrokers.com. We EDUCATE and DELIVER!