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As a reminder, FHA’s mortgage insurance changes are in effect as of today.     The change brings an increase and a decrease. 

The new Upfront Mortgage Insurance Premium (UFMIP) that is rolled into a borrower’s loan dropped from 2.25% to 1% for all amortization terms.  The annual MI premium increased to .25-.90% depending on the loan’s amortization term (.90% for the most popular FHA scenario – 30 year fixed with a 3.5% down payment). 

The loan amount is less but the  MI  increases the payment.  Clients benefit in the long term by paying less interest, but the monthly mortgage payments are higher.    

FHA remains a smart option for many clients.    My advice for you, regardless of loan type, is know why a particular program is your best strategy and what goals it achieves.   Not sure?   It would be my pleasure to help explore your options.

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News You Can Use

To get the lowest mortgage payment, focus on the loan’s rate – right? Yes and no. Borrowers want and deserve to obtain a loan that meets their short and long term goals that has a competitive rate.   But there’s more than just the loan’s rate to think about. If that loan has mortgage insurance, that deserves attention as well. 

When it comes to MI, there are three things to take into account: which company is providing coverage, can the lender offer below market MI rates, and how the MI affects qualification amounts.

Consider this: the published rates for the country’s leading MI companies range from .78 to .94% for a borrower with a 700+ credit score purchasing a home with a 95% Loan to Value. If that loan is $200,000 those rates translate to $130-157/mo – a difference of over $300/yr.   See how the MI company impacts the payment?

We’re fortunate to have relationships with several companies which allow us to offer preferred MI pricing to our clients. Using this same example, if this borrower was my client their MI rate could be as low as .631% – a monthly savings of up to $52/mo. That adds up to over $600/yr and $6000+ over the next ten years. Now we’re talking some serious bucks. 

Another thing to think about is how this influences the borrower’s qualification amount. A $50 monthly savings translates into a $9000 increase in their qualification limit. Imagine what that would do to their buying power and property selection.

The take away here is mortgage insurance is more than just an afterthought.   It deserves proper attention, knowledge and advice to maximize its’ use and minimize its’ cost.

Featured Loan Program

Mortgage Credit Certificate

Cunningham & Company along with North Carolina Housing Finance Agency offers the Mortgage Credit Certificate program to help qualified homebuyers obtain a federal tax credit.

Have You Heard?

Many people run from their fears and it has negative consequences on their business. The difference between failure and success is understanding those fears, overcoming them, and profiting from them. Think about it…if you’re part of the 1% that doesn’t run from your fear, you’ll be part of the 1% that significantly grows your business this year.

Join us June 3rd for the Fearless Living Tour with John Alexandrov, Dave Jenks, and Laurie Hathorn.   Looking forward to seeing YOU there! 

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