Many prospective home buyers often have an adverse or negative reaction to the words “mortgage insurance” because they’ve heard that it’s a bad thing. But is it? The buyer is required to pay mortgage insurance whenever the amount of their loan exceeds the value of the home by 20%. What most homebuyers aren’t aware of is the fact that they can restructure their loan payments using Lender Paid Mortgage Insurance if they don’t like the idea of having to pay mortgage insurance with their mortgage payments.
What Exactly is Lender Paid Mortgage Insurance?
Lender Paid Mortgage Insurance or LPMI is usually available on conventional home loans only. The concept is relatively simple. When you get approved for a home loan, you either pay a fee upfront or you pay a higher interest rate and the lender will pay the mortgage insurance for you. When you do the math, you could save a fairly sizeable amount of money on your monthly loan payments if you get LPMI. Let us help you with your mortgage issues.
One of the drawbacks is that technically, you’re still paying for the insurance. It’s really your payment structure that changes. Unlike normal insurance payments, you have a choice of paying a lump sum upfront or making larger mortgage payments each month. However, in either case, you could wind up paying less money than you would if you get Private Mortgage Insurance (PMI) separately.
Good Credit is a Requirement
Unfortunately, not everyone is able to get Lender Paid Mortgage Insurance. Despite the fact that LPMI is becoming more available than it has been the past few years, not all mortgage lenders are offering it. Furthermore, a FICO score of 700 or better is usually required to qualify for LPMI. Additionally, the rate adjustment that you’ll be responsible for paying is going to be tied to your credit score. In other words, the lower your credit score, the higher the increase.
Homebuying or Refinancing in Fort Lauderdale
LPMI is not right for individuals who make a substantially larger down payment when purchasing a home. If you start out with that much equity, you’ll be able to cancel Private Mortgage Insurance in a few years as it is. Therefore, Lender Paid Mortgage Insurance wouldn’t be that beneficial to you anyway.
The bottom line is that you need to research what lenders are willing to offer you, do the math, and see what is right for you. To learn more about Lender Paid Mortgage Insurance, contact Florida State Mortgage Group, Inc. at (954) 359-3000 today. Their business representatives are available to answer your questions. Call us now.