It’s July and the heat sure has been turned up lately! This means its time to make sure those home warranties aren’t expired so all your properties are covered when the AC breaks. In other news, I am excited to announce that after 18 months at Primelending, I have taken my branch back to Peoples Mortgage. I am thankful for the experience at Primelending and relationships that were made, but our home is back at Peoples Mortgage based out of Tempe. We are excited to continue doing business with all the Azreia members by being able to offer even more creative products including commercial financing as well.
For this month’s article I wanted to cover mortgage insurance and the different types of mortgage insurance a borrower may pay on their loan. Most borrowers assume that unless they put 20% down payment, they will always have to pay mortgage insurance; this is simply not true. Mortgage insurance companies offer different types of mortgage insurance products and it is our job as the lender, to inform the borrower of what mortgage insurance products they qualify for. Below are the different types of mortgage insurance products a borrower may be eligible for.
- Regular Monthly Mortgage Insurance – This is standard form of mortgage insurance that borrowers may recognize. Monthly mortgage insurance amounts vary for every borrower depending on the loan program, credit score, debt to income ratio, down payment, etc. Monthly mortgage insurance can be cancelled when a borrower pays the loan to 80% of the original value/purchase price.
- Borrower-Paid Single Premium – This form of mortgage insurance is best describes as paying all your mortgage insurance upfront, and receiving a discount for doing so in most situations. This form of mortgage insurance also varies for every borrower depending on the loan program, credit score, debt to income ratio, down payment, etc. In most situations, the single premium can save you a lot of money but usually favors the strong credit score borrower.
- Split Premium – This form of mortgage insurance is sort of a combo between #1 and #2 above. Split premium mortgage insurance is where a borrower will bring a portion of the premium to closing upfront, then pay a much more discounted monthly rate in the loan.
- Lender-Paid Mortgage Insurance – With lender-paid mortgage insurance, the will technically pay the mortgage insurance premium. The caveat with lender-paid mortgage insurance is a higher interest rate on the loan.
I hope everyone’s summer has been successful thus far, please let me know if you have any questions relating to mortgage insurance. We hope to see you at the next AZREIA meeting!
By Andrew Augustyniak, Branch Manager Prime Lending