Special offer

I know this sounds crazy but....

By
Mortgage and Lending with FHA home loan, VA home loan, zero down home loan

I know this sounds crazy, but have you considered using mortgage insurance to reduce your buyer's monthly scalepayments so they can qualify for more house?  As you are well aware, if you are working with buyers who are making a down payment of less than 20% on a conventional loan, the mortgage insurance companies are calling the shots. Ratios are limited for most buyers to 41%, and if the borrower is really stellar and has a FICO of more than 740, we can stretch to 45%. So maximizing buying power is really important to your buyers. Let me show you how it works. Using financed MI will reduce your borrower's monthly payment.

Assume your buyer earns $120,000 a year and has a 745 FICO. This allows him to use 45% of his income towards debt, which is $4,500/mo. If your buyer has a car loan and a couple of other debts totaling $1,000/mo., this leaves him $3,500/mo for his house payment. If your borrower is getting 30 year fixed rate mortgage with a rate of 4.75%, using monthly mortgage insurance, your borrower can qualify to buy a property with a sales price of $450,000:

Loan Amount $405,000

P & I $2,112.67                                                                                                                           MI 209.25                                                                                                                                   Escrows 1,162.50

Total Payment $3,484.42  If your borrower used financed MI on this same transaction their total payment money housewould be $$3,302.64, or a savings of $181.78 per month.

Now let’s show you how your buyer can qualify for a $475,000 property with an additional down payment of only $2500:

Base Loan Amount $427,500

Financed MI 5,557

Amount Financed$433,057                                                                                                                                               

P & I $2,259.03                                                                                                                         Escrows 1,227.08

Total Payment $3,486.11

house in shopping cartWhen compared to a monthly MI transaction on a sales price of $450,000, your buyer pays an additional $1.69/mo. for $25,000 more house. That’s an extra bedroom or media room they couldn’t swing otherwise!

Please, keep in mind when helping your buyers choose a loan officer, that creativity is an important factor in addition to experience.  A great loan officer should love the challenge of making deals work and pride themselves on providing borrowers with option so they can select the best possible deal for them personally.

Posted by

Jumbo Home Loans-Heath, Rockwall, Park Cities, Garland, Dallas, TexasRosanne Fett

The Home Loan Expert You Can Rely On

Cell Phone:  214-693-1840

E-mail:  rfett.homeloans@gmail.com

 

Comments (0)