Borrower Paid Mortgage Insurance

Borrower Paid Mortgage Insurance

Borrower paid mortgage (BPMI), or some type of insurance is required if less than 20% is put down. A version of mortgage insurance is required either monthly, Lender paid, Borrower paid  or single upfront premium mortgage insurance. Single premiums may be financed into the loan.

Borrower-paid mortgage insurance (BPMI) helps lenders offset the risk of a low-down payment mortgage. Borrowers can qualify for a loan with a smaller down payment, enabling them to purchase a home sooner.

Our BPMI gives you the flexibility and service advantages you need to operate more efficiently and, ultimately, to close more loans. You can offer borrowers a choice of monthly premiums or a single premium that can be paid at closing or financed into the loan.

Different levels of Mortgage insurance is needed on loan that have less than a 20% down payment. Typical levels increase as the down payment decreases. Highest levels are 97%,then decrease in segments of 5% starting at 95%,90%,and 85%

VA loans do not carry Mortgage insurance

lender Paid Mortgage insurance – NO MI Options

• Lender-paid mortgage insurance (LPMI) – NO MI Options benefits you and your homebuyers. With LPMI, the lender pays the MI premium on the borrower’s behalf, while charging a slightly higher interest rate on the loan to cover the cost. The lender can negotiate a lower cost thus saving you money. You pay one interest rate that is tax deductible and no additional money’s.  So if you are paying mi and the interest rate with lender paid mi is lower than your current rate , you should refinance and save the money you are paying on MI.  Most purchase can be done with NO MI or Lender paid MI and be cheaper than a loan with normal MI.  This lender paid portion of the MI does not drop later as the interest rate on the loan is just that the interest rate.

Benefits to Lenders – Lender Paid Mortgage Insurance

In addition to increasing the loan volume, LPMI lets you realize additional servicing profits through secondary marketing execution. Benefits include:

• • Potential to originate larger first mortgages, resulting in higher servicing values
  • Increase retention rates and repeat loan transactions through higher customer satisfaction
  • For your most creditworthy borrowers, Radian’s risk-based pricing option can offer even better rates

Benefits to Borrowers

LPMI benefits borrowers by eliminating MI closing costs and monthly MI premiums and also provides these additional benefits:

• • Lower down payment needed – frees up cash for other things
  • Possibility of qualifying for a larger loan without increasing monthly payments
  • MI premium may be tax-deductible

Borrower paid MI rater Linked to radian

http://www.radian.biz/page?name=MIRateFinder

 80-10-10 0r 80-15-5 combo financing is the most common use of second trust for mortgage insurance avoidance.  By doing an 80% first and a second for the difference of the down payment either 10% 0r 15 % second the first trust lender would not require mortgage insurance. This can also allow someone to purchase a higher priced home and still avoid mortgage insurance. Typically the jumbo loans allow only 90% financing over a $417,000-625,500. You can combine a first of $417,000 and a second of $250,000. to 95% loan to value.

• Single or Single Financed Premium Mortgage Insurance

Borrowers can pay a one-time lump sum payment, or if they don’t have sufficient funds at closing, Single Financed Premium lets them finance their MI into the loan amount.

This attractive option offers a low monthly payment and reduces the amount necessary at closing. Single Financed Premium MI is best for borrowers who want to minimize their monthly payment.

Benefits to Lenders

• • Attract more borrowers
  • Increase profitability
  • Close more loans
  • Reduce servicing costs – with only one MI premium payment, no need to remit or reconcile monthly MI premiums
  • Generate larger servicing values due to larger loan amounts

Benefits to Borrowers

• • Borrowers may qualify for a larger loan because of the lower payment
  • MI premium may be tax-deductible
  • Single monthly payment
  • Monthly payments that never vary
  • Lowest MI cost option for most consumers

Split premium

• By splitting the MI cost into an upfront premium and a smaller monthly renewal, dramatically reduces a borrower’s monthly MI payment, which can help them qualify for a larger loan while generating higher profits for you.

The upfront premium gives the borrower a credit at closing, which is used to buy down the MI premium. Upfront single premiums can be .50%, .75%, 1.00% or 1.25% of the loan amount, with the balance of the MI premium paid monthly.

Benefits to Lenders

• • Increases loan volume
  • Generates larger servicing values due to larger loan amounts

Benefits to Borrowers

• • Helps your borrowers qualify for larger loans without increasing monthly payment
  • Lower monthly renewal rates for MI premiums
  • No balloon payments
  • MI premium may be tax-deductible

Preserves borrower’s ability to build and borrow against their home’s equity