It doesn't matter if you are buying homes in Indianapolis, or looking for Carmel homes for sale or anywhere else in America. It doesn't matter if you are refinancing your home to lower a rate or shorten a term or put cash in your pocket. Bank owned properties are not exempt. If you have a loan to value higher than 80% you will be required to have mortgage insurance coverage. If you use any number of government insured programs you will have a funding fee and/or mortgage insurance premium to pay for the same coverage.
People confuse this with homeowner liability coverage or disability and life insurance. This is default insurance to cover the lender if you do not pay your mortgage payments.
Your first response may be "No thank you, I'll pass" Unfortunately, that is not an option. But what does it really do for you? And how can you make sure to get the best product for your goals?
If you follow the real estate news or if you are looking for foreclosures in Indianapolis or whatever your strategy, this is an issue you should understand. It may make a significant difference in your investment return.
First of all, let's separate between Government insured products and conventional products. FHA, VA, USDA and most state programs require mortgage insurance coverage or a funding fee. They are not optional. In this case you are paying for a very minimum down payment and very flexible credit requirements. Without the government guarantee you would likely not be able to buy a home with financing.
If you have a 5% down payment and a credit score above 680, you are a great candidate for conventional financing. In this case, the cost of mortgage insurance will vary depending upon the actual loan to value and your credit score. You can either pay on a monthly premium basis or a one time upfront premium. The up front premium can be paid through a slightly higher interest rate which usually is lower than the combination of a lower rate and a monthly premium.
When you are looking at real estate news, shopping for Indianapolis mortgages or working with your Century 21 Scheetz agent keep MI in the back of your mind. It is a real cost and a closing cost. You can use it to your best advantage in pricing, and negotiating the terms of your purchase. There is a great site to play with that will allow you to personalize comparisons of products. The MGIC Comparison Calculators will show you how to best use your money
Ed L. DeWitt
#141863
edewitt@stonegatemtg.com
317-973-4134
