You have several options for Mortgage Insurance on conventional loans.
Knowing some of these options could be the difference between a decline and approval in some cases.
Currently there are four ways to pay mortgage insurance…
1) Standard borrower paid monthly.
2) Lender paid MI.
3) Split MI.
4) Financed MI.
Discussing all of these in one post would create a long post!
So, for the purposes of this post 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!
Brett