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Mortgage Insurance

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Mortgage and Lending with NMLS197757 197757

Mortgage insurance will be a topic your buyers will likely ask you about for years to come. A basic understanding will establish you as a well rounded resource and true craftsperson. As a Realtor you never want to pick a program based on MI because of all the borrowers credit variables but you do want to be armed with enough knowledge to dialogue with your lender. The best lenders will take the time to describe features and benefits to you.   

 

Let’s start with conventional PMI (Private Mortgage Insurance). This form of MI is termed private because it is offered by private corporations versus taxpayer funded agencies such as FHA, VA or USDA. 

 

Good things happen! As home prices stabilize, PMI rates continue to decrease. Lower PMI rates along with current low mortgage rates, downpayment assistance, reduced downpayment Jumbo's and great housing prices all help to confirm that this a wonderful time for homebuyers.

 

PMI is typically the least expensive of the various MI categories yet it can be, contrary to popular opinion, the most difficult to underwrite to. Why? PMI is the private mortgage market. PMI pays from corporate profits requiring efficiency in claims payment. Efficiencies and accountability escalated when PMI companies were hit hard during the downturn. PMI companies didn't have the printing presses that Uncle Sam had so they had to tighten their belts and start underwriting more conservatively than years prior. This has had an impact on conventional underwriting.

 

The primary exception to reduced mortgage insurance rates has been FHA. In the last few years FHA has increased its rates several times and has eliminated the capacity to drop MI at the 78% loan to value ratio (with very few exceptions). However, it appears some logical force may have taken hold at FHA. The department is likely to start offering reduced rates and or annualized reductions for homebuyers/homeowners that partake in housing counseling and or pay their payments on time.

 

VA doesn't call their coverage mortgage insurance, they refer to their insurance plan as a VA Funding FEE (VAFF). VA rates have been stable throughout the financial crisis- they haven't raised or mentioned if they would decrease rates. VA does offer a waiver of the VAFF if the Veteran has obtained a 10% or greater disability status. Imagine having a zero down loan, $10,000 grant for loan reduction, no VAFF and no monthly MI charge- what a great payment AND loan! Yay VA.

 

So I don't bore you too much, you can look up various program rates by goggling the programs directly.

 

Have more questions? Don't hesitate to call.

 

 

Gil Kerbashian

(847) 873-7295

gilmtg@gmail.com

NMLS 197757

Inland Bank

Residential Lending

Posted by

Gil Kerbashian

(847) 873-7295

Mortgage Banker and Broker to insure the best rates and highest likelyhood of approval

NMLS 1997757

Inland Bank - 50 State Lending

Comments (1)

Bill Reddington
Re/max By The Sea - Destin, FL
Destin Florida Real Estate

I still believe that I refer costs like PMI to a qualified lender as the rules seem to change almost daily.

May 22, 2014 02:09 PM