Know your Mortgage insurance options

If you are putting down less than 20%, you will have to pay some form of mortgage insurance, but you should know your options!

FHA mortgage insurance- FHA loans all require mortgage insurance, both monthly, and a one time lump some added on the top of the loan.

The annual mortgage insurance for FHA is .85% of the base loan amount.

Ex. Joe's buying a home for $250,000. He is putting down 3.5%. His base mortgage (FHA will put an additional 1.75% on top of the base loan) is $241,250. The monthly MI would be about $171 per month.

If you put down 5% or more on an FHA loan, the premium will drop to .80% annually.

Ex. Joe's $250,000 purchase, 5% down, $237,500 base loan. The mortgage insurance would drop to about $158 per month.

What about conventional? Conventional loans with less than 20% down will have PMI or private mortgage insurance. The difference with PMI from FHA's monthly MI is that the monthly cost will be determined by 1. the credit score 2. the down payment amount.

If you have a great credit score and put down 10%, your mortgage insurance premium would be much lower than FHA's mortgage insurance.

This is cool though . . . Conventional loans will let you buy out the mortgage insurance for a one time fee! That's right, get rid of the monthly payments and pay it up front. Why could this be a better option? If you can get a seller credit on the purchase of your home . . . then

The following link is a great resource for figuring out conventional mortgage insurance:

https://ratefinder.essent.us/Home/IndexResponsive

For more details, or questions, call me or send me an email, everyone's situation is different, but knowledge and options put YOU in control!


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