Top Strategy - Mortgage Insurance Options

Affordability is a struggle, especially for first-time home buyers or other borrowers who need to put less than 20% down, which adds a requirement for mortgage insurance.

Our Mortgage Insurance Options presentations help Loan Officers educate borrowers on their options for paying the mortgage insurance premium. 

• One approach is to compare the borrower paying a Monthly Mortgage Insurance Premium (as part of the loan payment) to a second option for Lender-Paid Mortgage Insurance, and a third option for Split Mortgage Insurance (where the lender pays part of the premium and the borrower pays part). This example presentation lays out those options.
  
  
• Here is a second approach that compares Monthly MI, Single Premium MI and Single Premium MI Financed. In this Mortgage Insurance Options presentation example, we start with a base loan amount of $450,000.

1. 1. The first loan option (Monthly MI) includes $127.50 for the monthly mortgage insurance premium, making a total payment of $3,742.10.
   2. The second loan option (Single Premium MI) assumes that the mortgage insurance is paid up front, reducing the monthly payment to $3,614.69 (and improving affordability). As you can see in the Summary (the second chart shown) this increases the required Cash to Close by $5,940 ($64,535 compared to $58,595). However, this could potentially be negotiated as a seller concession.
   3. The third loan option (Single Premium MI Financed) assumes that the $5,940 one-time premium is added to the loan amount instead, increasing it to $455,940. This works out to a monthly payment of $3,654.21, which actually saves $87.98 compared to the monthly mortgage insurance premium.

Monthly Payment Comparison

Loan Options Summary