Homebuying December 21 2017

What Is Mortgage Insurance And How Does It Work?

Putting less than 20% down on your home sounds like a dream…but what’s the catch? You will most likely have to pay mortgage insurance until you reach that 20% threshold. This insurance policy lowers the risk of the lender so that you can qualify for a loan that you might not otherwise be able to get. If you are required to pay mortgage insurance, it may be included in your total monthly payment, in your closing costs, or both. The terms of this policy are dependent on the loan type you are applying for.

Differences in Mortgage Insurance with Loan Type

Conventional Loan

With a conventional loan, private mortgage insurance (PMI) is implemented through a private company. The premium is typically included in monthly payment with little to no closing costs. Your rates will vary based on the down payment amount and your credit score.

Government Loans

Federal Housing Administration (FHA) Loan Mortgage insurance premium is paid to the Federal Housing Administration (FHA) and is required for all FHA loans. It is included in closing costs and your monthly payment. Your rates are the same regardless of credit score, but there is a slight increase in price with a down payment of less than 5 percent. US Department of Agriculture (USDA) loan This program is similar to the Federal Housing Administration but can be cheaper. The payment is included in closing costs and your monthly payment. Department of Veterans’ Affairs (VA) loan The VA guarantee eliminates a monthly mortgage insurance fee and instead requires an upfront “funding fee”. The amount of the fee depends on criteria based on military service, down payment, and more. With all government loans, you have the ability to roll the upfront or closing cost fee into your total mortgage instead of paying out of pocket. However, this increases both your loan amount and overall costs.

Sources: consumerfinance.gov/

Search Results for query

July 14 2021

2021 Home Renovation Trends

This year, home remodeling dollars are flowing toward projects that improve our health, increase our privacy, boost our mood and make our homes a healthier place to be. Here are some ideas to steal as you plan your next house project.

Read More

July 07 2021

6 Surprising Ideas for an At-Home Staycation

Here are some ideas to help make your time staying close to home, time well spent —without spending much.

Read More

June 30 2021

4 Long-term Strategies for Paying Off Your Mortgage

How to save time, money and pay off your loan in a way that makes sense for you.

Read More

June 23 2021

3 Things You Should Never Do If You're Getting Ready to Buy a Home

Here are some of the top mistakes you should never make before you buy a home.

Read More

June 16 2021

Pest-proof Your Home and Yard for Summer

Here are some tried-and-true strategies for keeping bugs and other pests at bay during the summer months

Read More

June 09 2021

4 Ways to Weatherproof Your Home for Summer

How to inspect, repair, and get your home ready for warmer months

Read More

June 03 2021

Budget-friendly Outdoor Entertaining Hacks

Host a fab get-together without breaking the bank with these budget-friendly outdoor hacks.

Read More

May 25 2021

When is the Right Time to Refinance Your Mortgage?

Mortgage rates have been at historic lows for years, but with the post-pandemic economic uncertainty and possible inflation looming, there's been a scramble for homeowners considering refinancing.

Read More

May 20 2021

How to Choose the Right Closing Date on a New Home

What you need to know about setting a date that works for you and might save you money.

Read More

12345Last

Mortgage Calculators

Crunch the Numbers With Our Helpful Mortgage Calculators

Payment Calculator

payment calculator

Payment
Calculator

Affordability Calculator

affordability calculator

Affordability
Calculator

Refinance Calculator

refinance calculator

Refinance
Calculator

The Modern Digital Mortgage with a Personal Touch

Paperless. Effortless. Awesomeness TM

Simplify the home financing process with our Digital Mortgage. We'll be here to help navigate you through the entire process.

Get Pre-qualifiedWhat is a Digital Mortgage?