Many borrowers are unaware of this but there are several ways to purchaseMortgage Insurance on conventional loans.(Even many loan officers are unaware of this!..)
The different types of MI are…
1) Standard borrower paid monthly.
2) Lender paid MI.
3) Split MI.
4) Financed MI.
For the purposes of this blog I’m going to discuss the Financed option.
…and, I’m going to show you how to get the seller to pay it!
Here are some little known facts about financed MI on conventional loans…
1) The premium is a single premium paid at closing.
2) The Financed MI premium may be financed into the loan or paid at closing.
3) Financed MI premium may be paid with seller contributions!
4) There are refundable options.
Did ‘ya see number 3? …That’s right you can negotiate for the seller to pay your MI in a single premium at closing.
Here’s an example of how this can help you…
| Program | Loan Amount | Interest Rate | P&I Payment | Monthly MI | P&I + MI |
| Monthly paid MI | $200,000.00 | 4.88% | $1,059.00 | $93.33 | $1,152.00 |
| Financed MI paid by seller | $200,000.00 | 4.88% | $1,059.00 | $0.00 | $1,059.00 |
| Financed MI rolled into loan | $202,900.00 | 4.875 | $1,074.00 | $0.00 | $1,074.00 |
That’s a savings of $4,680 over 5 years, and if the seller pays the MI premium that is almost $5,600 over 5 years!
That’s it for today!
Have a good day today! …and thanks for reading.
Brett
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