What is mortgage insurance and are there any different payment options?
On a conventional loan, if you put less than 20% down, you will have some form of mortgage insurance or MI. Monthly MI is the most common. You will have this insurance until you have the property equity for that MI to drop off.
The other way to do it is a single premium and there are 2 options here: refundable and non-refundable.
In this market, a non-refundable single premium can be risky because if you refinance in the next few years, you can be subjected to it again, and none will be refunded.
With refundable single-premium mortgage insurance, you can get some of it refunded back to you. This option is appealing because it can lower your payment tremendously.
Other options with mortgage insurance include lender-paid mortgage insurance meaning you take a higher interest rate and we, the lender, pay it for you. Another option is the seller can contribute to your closing costs. You choose a refundable or non-refundable option and then you aren’t responsible for coming up with the cash to pay it.
If you have additional questions about mortgage insurance or want to discuss different scenarios our LendScout Loan Officers will be happy to walk you through it!
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