I Can Turn $3000 into $16,000...

I Can Turn $3000 into $16,000...

...can your mortgage professional do that?

Thankfully, the frequency with which we're seeing appraisals come in under value is decreasing, but it does still happen from time to time.  Recently, I had a scenario where we expected a value of $400,000 and had to peg the loan right at 80% loan-to-value (LTV), an amount of $320,000.

We did get a high-quality appraisal, but our value was not quite there.  The opinion of value was placed at $380,000.

My borrower, because of what he'd heard and feared, just assumed either:

• His deal was dead, or,
• He'd need to pony up $16,000 in order to keep his loan-to-value at 80%.

I offered a third solution --- one that many loan professionals don't understand, suggest or use:  Single premium mortgage insurance.

In our case here, for the cost of approximately 1% of the loan amount ($3200), this borrower could "buy out" the mortgage insurance he would have otherwise needed to pay on a monthly basis.  This would, in turn, leave him with:

1. NO MONTHLY PMI PAYMENTS. 
2. All debt on a fixed rate loan.
3. Zero change to the interest rate.
4. No subordinate financing.

Single premium mortgage insurance can be a great resource and a real problem solver.  It is under-utilized primarily because it carries the stigma of being a mortgage insurance program (PMI).  But in the right cases, I believe it is the best tool for the job, and as you can see here, it elegantly gave us the solution we needed.  SPMI works in both purchase and refinance settings too, and it's actually less expensive for purchases.

If your California mortgage professional can't turn $3000 into $16,000, or if you'd like more information about single premium mortgage insurance, give me a call today and let's work together.