January 24th, 2015
Mortgage insurance is required on all FHA loans and on Conventional loans where there is less than 20% equity. This covers the Lender's risks. FHA charges the client with two forms of mortgage insurance. There is a 1.750% upfront mortgage insurance fee that is added to the loan and financed in, and a monthly mortgage insurance fee (recently lowered by the White House by 50 basis points despite the MI carriers rebuttal). So for example, what was a 135 basis points on a 90% + loan, is now 85 basis points (on a $100000 loan this reduces the monthly fee from $112.50/ mo. to $70.83/mo.). Conventional loans offer 2 types of MI to choose from: 1) traditional MI costs are based on credit score, LTV, zipcode, loan size, etc.,BUTt is still less than FHA MI costs.2) Lender paid MI charges about .250% extra more in the rate, BUT then there is no extra monthly MI costs. In the short term this means a lower payment for the borrower. Your Mortgage Broker can run the varios scenarios to see which plan is best for your client's needs for the short and long term. We can help, give us a call - DIVERSIFIED MORTGAGE BROKERS -26 YEARS SERVING CENTRAL VIRGINIA AND BEYOND-Tel: 434-237-3143, Email: firstname.lastname@example.org, Web: www.diversifiedmortbrokers.com . WE EDUCATE & DELIVER !