Mortgage insurance Loans

Lender Paid Mortgage Insurance Loans

Assumptions: Purchase of a home at $200,000 with 5% down and a loan amount of $190,000. 30 year fixed loan at a generic rate (not current rates) of 5.00%. Assumes a credit score of 740 + and 30% MI coverage. Single Family Detached Home, Owner Occupied in Utah. This scenario is being used only to show the different between LPMI and Monthly MI.

Lender Paid Mortgage Insurance (LPMI)
Principal & Interest: $1063.95
Homeowners Ins: $38.33
Property Taxes: $100
Mtg Ins: $0
Total: $1202.28

Monthly Mortgage Insurance (MMI)
Principal & Interest: $1019.96
Homeowners Ins: $38.33
Property Taxes: $100
Mtg Ins: $88.67
Total: 1246.96

Main Points:
LPMI is the better loan for the short-term. It gives you a lower payment overall. If you plan to sell or refinance in the first 10 years it may be a great option for you.
If you plan to make extra payments on your loan or stay in the home for 30 years than MMI may be the better option because once the MI drops off you’ll save an additional $88.67 a month.
If you were to just make normal payments the MI can come off after about 10 years.

Like almost all loans, the answer on what is best for you depends on your best guess for the future. Talk with me and we can strategize together!

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