Generally speaking mortgage insurance is charged to borrowers, who put down anything less than 20% on a purchase. Similarly, for refinances, if the amount financed is greater than 80% of the appraised value, some form of mortgage insurance applies. Traditionally mortgage insurance has been paid monthly by borrowers and included in their mortgage payments until the loan is paid down sufficiently to allow it to be removed. Historically this had been a one size fits all premium.
However, in recent years there has been competition among insurers for certain types of loans, and this allows us to “shop” mortgage insurance premiums among companies. Not all lenders have the ability to do this, so it may be a good idea to ask your loan officer what the mortgage insurance options are. In addition to being able to shop for the lowest rate, there are other alternatives as well, such as lender paid mortgage insurance. This is insurance which is paid by the lender all at once up front, and is financed through the borrower paying a slightly higher interest rate. In most cases this leads to a significantly lower monthly payment.
A good loan officer can walk you through the options you have regarding mortgage insurance. If you have questions, please feel free to call me!
Holly Hart – Loan Officer, NMLS ID 219868
For more info contact 410-984-8692 or firstname.lastname@example.org