Only you know what the right solution is for you and your family. The question of renting versus buying, or waiting until you have a substantial downpayment to purchase a home – the decision is yours.
Providing you with an option and explaining what mortgage insurance (MI) is – that’s where we can help. Here are some of the benefits of having mortgage insurance:
Buy your dream home sooner – own a home with as little as 3% down.
Flexible premium payment options are available – your lender can offer several options for MI payment
Premium payments are temporary – MI can be cancelled once your home reaches 80% of its original value
A safety net is in place in times of financial hardship – Radian can assist a homeowner in working with the lender to keep their home.
Frequently Asked Questions about Mortgage Insurance
Won't MI just increase my mortgage payment?
Your mortgage payments are determined mainly by the interest rate and the loan amount. Mortgage insurance represents only a very small percentage of your mortgage payment.
How much does MI cost?
It varies. You’ll need less mortgage insurance with 15% down than you will with 3% down. It also depends on the type of mortgage and other factors. Your lender can provide you with specific payment amounts.
Do I have to keep paying for MI for the length of my mortgage?
No. You may request MI cancellation when your mortgage balance reaches 80% of the home's original or current appraised value. Further, the Federal Homeowners Protection Act requires that mortgage insurance be canceled automatically when the balance reaches 78%. This law may not apply to all mortgages. Your lender can tell you whether your mortgage qualifies.
At closing, your lender must provide you with written notification that there is mortgage insurance on the loan and that you have a right to cancel under certain conditions. Each year thereafter, your lender must send you a reminder that you have MI and that you can request cancellation once the requirements are met.
To learn more about cancellation, contact your mortgage servicer.
How do I pay for mortgage insurance?
You may have several options, ranging from monthly premiums to a single premium financed as part of your mortgage.
Why do lenders need protection?
While MI makes it possible to buy a home sooner, it also protects your bank or lending institution if you’re unable to continue making your mortgage payments.
Studies have shown that homeowners with less than 20% invested in a home are more likely to default. That makes low-down-payment mortgages riskier for lenders and investors. Mortgage insurance helps cover this additional risk.
I have more questions about MI. Who can I ask?
For specifics about available MI products and prices, or to learn more about the homebuying process, contact a mortgage lender in your area.