Perfect loan since most Loan to Value above 80% usually requires Mortgage Insurance.
When there isnt atleast 20% equity in a property, most lenders require mortgage insurance to offset the risk of having minimal or limited equity. This is added to your monthly payment, and usually once there is a build up of equity, then the lender can remove the Mortgage Insurance from your loan payments. But there has to be atleast 20% equity for conventional loans and 22% percent equity for FHA insured loans in order for the lender to feel comfortable removing the mortgage insurance monthly premium.
No Mortgage Insurance Loans:
There are a few options available for borrowers that just want a conventional loan without the requirements of dealing with mortgage insurance every month. We have a special program whereas you can go up to 95% on a conventional mortgage (basically 5% downpayment on a purchase), and save hundreds of dollars per month by not paying the mortgage insurance in addition to your regular mortgage payment.
How does this work?
Since I believe in being transparent, there is a premium added to the rate to offset the cost for the mortgage insurance. Your payment actually looks more attractive than a mortgage payment with Mortgage Insurance. In essence, you pay maybe a .25%-.375% higher in a rate by choosing to not have mortgage insurance, but you can save thousands of dollars in the long run by savings you incur per month by not having Mortgage Insurance.
Loan Scenarios: (Assuming purchase price $210,000 and the difference between FHA, Conventional with MI and Conventional with no MI )
Loan Downpayment Rate Monthly Payment
Conventional MI (95% ltv) $10,250 3.50% $898 + $191MI= $1089
Conventional NO MI (95%) $10,250 4.125% $969
FHA loan (96.5% ltv) $7350 3.25% $899 + $211MIP=$1111
As you can see each has its seperate benefits, FHA has the lowest interest rate and required downpayment but a higher Mortage Insurance, and the Conventional with MI is at $191 per month with an avergae good market rate. The NO MI option gives you the lowest possible payment, but a higher interest rate.
NO MI mortgage main advantage and benefit
With the NO MI option you actually gain buying power. If for example you were comfortable with the $1111 payment that FHA offers on a $210,000 purchase, you could buy a home at about $230,000 and keep the same monthly payments as you would with a $210,000 FHA loan. Gives you buying power!
To Inquire about the NO MI mortgage options, please contact us :