This is now something that needs to go under consideration buy your buyers. The lender paid option will not work for every buyer that you have but for the ones with the higher fico's there is now a new option for them.
Here is a quick break down on what customer would fit this lender paid mortgage insurance option. The MI companies will do it with a 660 FICO but we are all well aware of investor over lays so i would really keep it to 680 and above. Price ( rate adjustments) really won't come into play with any borrower with a 720 or higher fico score.
I broke down a scenario here to help show what the lender paid mortgage insurance option can do for the right buyer:
$200,000 purchase price, 730 fico score, $4500 annual real estate taxes, and $850 annual home owners insurance. Let's see how FHA stacks up with the lender paid mortgage insurance program.
FHA - rate of 4.75% - 96.5% LTV - down payment of $7,000
P and I payment of 1,016.85, taxes $375, 70.83 Insurance, $183.66 monthly mortgage insurance
Total PITI of $1646.34
Lender Paid Mortgage Insurance - Rate of 5.375% - 95% LTV - down payment of $10,000- $4,500 taxes - $850 home owners Insurance
P and I payment of $1063.95 - taxes $375 - 70.83 insurance
Total PITI of $1509.78
Total montly savings is $136.56
To me it is all about presenting consumers with options and I feel like this is one worth checking into for them.
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