mortgage insurance tips and guide

Issues on Private Mortgage Insurance Rates

While private mortgage insurance rates have been a popular topic in today’s online forum, people may start thinking to know further about them. The fact is that the amount of premiums for mortgage insurance is always various, depending on several factors which happen to be different among people.

Determining Factors

These factors affecting private mortgage insurance rates include your income, the number of dependants (kids) living with you in the house, whether you apply as a sole person or with your spouse, other payments you must make through the year and so forth. The lenders may also ask you about other things such as your credit history and whether you make another loan or not.

Besides knowing these factors, one should know in depth about other issues that relate with insurance rates. These issues should be taken into consideration before he or she applies for a mortgage insurance to avoid him or her from mortgage pitfalls.

Say No for High Premiums

The best way to avoid high private mortgage insurance rates is not to apply for mortgage insurance at all. However, this will be quite challenging for some people since it means that they must pay 20 percent of the property’s value as a down payment. If one should wait for a long time to pay that amount of upfront, chances are the price of properties has gone up and that twenty percent of it would increase in value.

The reason why people go for high private mortgage insurance rates is merely because they do not have other choices. The good thing is that insurance allows them to make a monthly payment which seems to be easier to afford.

However, if the house owners scrutinize the price they pay, they will find exactly that they are paying higher than they should be. It is true that borrowers (house owners) should pay something to protect the lenders from some cases where they cannot pay off the mortgage but the rate is often offered such high that they may purchase a car by using that money.

Without mortgage insurance, one typically pays higher interest rates plus some administrative fees. However, the interest rates are commonly tax deductible while those mortgage rates are not.

Say Yes for High Premiums

The inability of the rates to be refunded has made private insurance mortgage less desirable for some people yet there are some financial enhancement companies which do refund the rates under certain terms and conditions.

Private mortgage insurance rates (which tend to be high), nonetheless, allow home buyers to be freed from paying the mortgage the whole life as the mortgage insurance can be stopped after they have reached 78 or 80 percent of the sale’s price.

Finally, the best way to decide whether house owners should apply for mortgage insurance or not depends on many factors. Comparing the estimated costs of paying private mortgage insurance rates and paying higher interest rates will really help house owners to make their mind. This can be done by making use of free mortgage calculator (it is called as “mortgage insurance versus higher rate calculator” in some sites) which is available online.

Review on Radian Mortgage Insurance

Radian Mortgage Insurance, as a product of Radian Insurance Inc., is an insurance which is aimed at protecting lenders as well as borrowers. Based in Philadelphia, this company offers mortgage insurance as well as any other related services.

Radian also provides a service in trading mortgages in secondary market. By assessing the risk of credit, Radian helps clients to manage risks in any condition.

Benefits of Insuring with Them

There are some advantages you will obtain once you decide to work with Radian Mortgage Insurance. The list of advantages goes as below.

Buyers can obtain their houses immediately since Radian allows them pay up 5 percent of the property’s value for down payment.
Radian Mortgage Insurance offers a tax deductible rate for borrowers with $100,000 incomes or less.
Flexible premium options are made available.
Buyers may cancel their mortgage insurance once it reaches 80 percent of the house price.
Radian Mortgage Insurance provides assistance for house buyers to work with their lenders in keeping their houses.

Radian Products for Lenders

Lenders will have to assist the borrowers to select the right type of insurance for both parties. As the lenders should minimize the risk of default losses on the mortgage payment while helping the borrowers to purchase the properties, Radian Mortgage Insurance offers mortgage insurance products that will surely meet this need.

· Borrower - Paid Mortgage Insurance (BPMI)

This first type of Radian Mortgage Insurances requires the mortgage premium to be paid by the borrowers. Payment can be made as a single upfront or monthly payment.

Using this type of product, the borrowers may choose monthly payment with a low upfront payment that allows them to get the house easier. On the other hand, the flexibility of payment opens the opportunity for lenders to attract more buyers as well as make it easier for them to manage the loans.

· Lender-Paid Mortgage Insurance (LPMI)

In this type of insurance, mortgage premium is paid by the lenders on the behalf of the respective buyers.

LPMI allows lenders to increase the loan volume, helps them create a bigger mortgage, raises retention rates as well as offers trusted borrowers with a risk-based pricing option. LPMI also benefits the borrowers in several ways, for instance, helping them removing monthly rates and closing costs, allowing them to pay a low down payment, and so on.

· Single or Single Financed Mortgage Insurance

While single payment requires borrowers to pay the premium at once, Single Financed Mortgage Insurance is an ideal option to reduce the amount of monthly payment as it presents a lower monthly payment as well as cutting the closing costs.

For lenders, this type of Radian Mortgage Insurance will surely bring more customers to them which in turn will add their profits and let them close more loans. The large amount of the loans will lead them to make a greater value of service.

· Split Edge

It is named so because the fact that the mortgage cost is divided into an upfront rate and a lower monthly renewal which in turn reduces the monthly payment of the mortgage.

While this type of Radian Mortgage Insurance lessens the renewal rates and protects the borrower’s ability to borrow against their equity, Split Edge benefits lenders by increasing loan volumes.

Know How Mortgage Insurance Rates Work!

Mortgage insurance rates may have triggered many questions among people who are planning to buy mortgage insurance. While the insurance is important, they have to obtain it lest they cannot purchase their dream properties.

However, wrong information and misunderstanding about this topic will only lead these people into rate pitfalls. That is why knowing a few details about the premium will be helpful.

Determining Factors

Mortgage insurance rates are varied to one loan provider to the other since each of them set up different rules on loans. However, there are several shared factors being used by those providers.

First, the amount of the loan. It is clear that the higher the loan, the more expensive the mortgage insurance rates will be. This is reasonable because this element will be used as the main calculation to estimate the rate. Second, credit histories of the borrowers, the better the history, the higher loan they can obtain later.

The total of down payment being made will also influence the amount of mortgage insurance rates. The borrower’s income, however, will also be used to determine the rates as well as the debt payment and other expenses. These elements have something to do with the ability of the borrower to pay the premium. Insurance companies do not want to take a risk by giving the loan in a blindfolded way, which potentially put them in a bigger risk.

FHA Standard

Federal Housing Authority (FHA) set higher mortgage insurance rates to be compared to any conventional providers. FHA charges a 0.5 percent of monthly payment while common mortgages’ rate may start from 0.3 percent. In addition, FHA also applies an additional 1.5 percent payment that must be submitted at the time of mortgage closing.

The fact that FHA’s rate increases this year means that the mortgage insurance will go up and make it even more expensive.

Paying the Rates

Several kinds of payment are made available for borrowers. Borrowers can pay the premium in one imbursement, or either to pay it monthly or annually. One time single premium excludes initial and renewal payments.

Annual premium is made by paying the mortgage insurance rates every month, but for yearly house payment. Unlike the annual payment, monthly premium requires the borrowers to pay the monthly rate instead of the whole year payment.

Cancelling and Refunding

As the mortgage insurance is expected when one pays less than 20 percent of the property’s value for the upfront payment, it can be cancelled when the respective person once exceeds this threshold.

Since the mortgage insurance rates are non refundable, there is no chance for the borrowers to obtain their money back. However, borrowers who make one-time payment are eligible for a certain amount of refund.

Knowing some elements of mortgage insurance rates and how they work in accordance with loan payment will give you a deeper insight about the mortgage insurance. Instead of that, you will be able to select which insurance gives you more benefits, in terms of policy and ease of payment and many others.

What Is Mortgage Insurance?

The question of “what is mortgage insurance” might appear the first time you were planning to buy a house. Even after the definition of mortgage insurance had been explained, you might be still confused because this type of insurance does not look like any other insurance. This is so because the one who buys the insurance is actually buying that insurance to insure other parties. Then, what is the point of calling it insurance? What is mortgage insurance actually?

Definition

Buying a house seems to be everyone’s dream but since the price of property is high, people are obliged to seek for financial supports. And of course, there are plenty of loan providers which are willing to help them; with a condition. The condition is that they must apply for a mortgage insurance that will protect the loan providers in case the borrower cannot pay the loan credit.

This seems to be more logical now that you have to pay something for others’ benefits. But you also obtain a benefit of buying a house, though, which is indirect yet a very significant advantage. However, what is mortgage insurance being purchased for if it cannot benefit the borrowers as well?

Requirements

Mortgage insurance is usually required if the borrowers pay the upfront payment as less than 20 percent of the house price. This percentage is seen as minimum and there is a fact for lenders that the smaller the down payment, the greater the risk they would face. What is mortgage insurance’s aid to help lenders handle the risk, then?

Mortgage insurance will pay the remaining credits that cannot be paid by the borrowers. For instance, a borrower can only pay 5 percent of the house price for down payment then stops making a payment, the mortgage insurance will pay the remaining 15 percent to meet the minimal credit percentage agreed by the borrower.

Payment Techniques

After mentioning a little about percentage in previous section, you may be triggered to ask what is mortgage insurance’s type of payment?

The most popular financing technique for mortgage insurance is called 80-10-10, which means with a down payment which is worth 10 percent of the property’s value, the borrower should pay 80 percent on the first mortgage while the remaining 10 percent must be paid on second mortgage. This technique is created to help the borrower from paying a high down payment while allowing him or her more time to pay the first mortgage. In this model of payment, the rate of second mortgage is set with a higher interest rate to encourage the borrower to pay off the credit faster.

While 10 percent upfront payment could be challenging for some people, there is another financing technique that allows the borrower to pay 5 percent for down payment, which is called 80-15-5. The first mortgage will be 80 percent of the property’s value while the second mortgage will be 15 percent.

What is mortgage insurance’s pitfall that may happen to borrowers? In some ugly cases, borrowers can be charged to buy mortgage insurance although they have paid more than 20 percent of the house’s price for the down payment. If such cases happen, the borrowers should report the provider to related authority.

Types of Mortgage Insurance Calculator

A mortgage insurance calculator is a device that you can rely on to estimate any payment related with the insurance. This estimation tool is usually free and can be found easily on the net.

However, to name it “estimation tool” means that the result of the device cannot be taken as a quote. Since each insurance provider may have different terms and condition, there are some determining factors which cannot be made available on the online mortgage insurance calculator.

Types

The benefits of using a mortgage insurance calculator depend on which type of device you use. Knowing each function of the device will give you the idea of the benefits of using the tools. Here we will discuss several types of them.

· Basic Repayment Calculator

This device will help you estimate the amount of payment you should make, taking into account the sum of the loan, the interest rate and the length of loan repayment.

By placing the above mentioned elements, this first type of mortgage insurance calculator will show you the list of repayment plans you can choose from; monthly, weekly, or fortnightly. The result will also show you the estimated amount of repayment as well as the interest to be paid.

· Loan Qualification Calculator

The second type of mortgage insurance calculator is the loan qualification calculator. This tool will show how lenders might view your qualification in terms of your applying for loans.

The calculator will ask your income as well as other elements that may affect your economic condition such as credit card, car and other loan payments.

· Loan Comparison Calculator

While finding the best price for your credit is important, loan comparison calculators come as a part of the mortgage insurance calculator’s family. This calculator will compare two or multiple home loans by considering some determining factors you put into it.

In this category, there is a calculator that compares the interest cost of a fixed rate and an adjustable rate mortgage. This device will help you decide which type of rate is best for you, considering your financial condition.

· Debt Consolidation Calculator

The fourth type of mortgage insurance calculator will help you decide whether you should merge your debt (cards, automobile, etc) with the second mortgage or not. The first mortgage will not be affected unless you also include it in calculation (which requires a bit complicated formula).

In addition, this calculator will also predict the length of time you need to break even the costs.

· Estimated Loan Calculator

Using this type of mortgage insurance calculator, you will know how much money you can borrow from a lender. Details required to fill out the calculator involve annual income, monthly expenses, whether you borrow solely on your own, and some information about credit card payments and dependants (kids, etc).

This calculator will show you your borrowing power as the sum of money to be borrowed may vary among lenders. Knowing how much loan you should take will help you choose the right provider, offering the right cost and policy.

Even though all these listed types of the mortgage insurance calculator are not quote tools, they are still helpful as they give you estimation over many things you will have to ponder before you take out your mortgage insurance.