Monday, September 16, 2013

Mortgage Insurance

Mortgage Insurance Premium Fee

One of my customers was ready to make an offer on a home.  He was pre-approved with a lender, however... that's all the lender did.  Just a pre-qualification.  Which means the lender pulled his credit score.  The buyer had a credit score above a 620, so... he received a Pre-Qualification Letter.

Ready to sign the offer, I went over an estimated cost sheet with my buyer.  I could see the shock in his eyes when he absorbed the estimated monthly mortgage payment... which included the Mortgage Insurance Premium Fee.  This fee was unfamiliar to him, as the lender did not discuss what fees the prospective buyer would be responsible for. 

My customer was expecting the PITI, (Principal, Interest, Taxes, Insurance for the home), but... was unaware of the Mortgage Insurance fee that is required when a buyer does not put 20% down, when making a purchase.  MI, (mortgage insurance), is an insurance policy, the lender makes a buyer purchase, when buying a home.   It's an insurance policy, (the lender hopes to never have to make a claim on) but, it will pay a percentage to the lender, should the buyer default the loan.

So, PITI could also be the Principal, Interest, Taxes, Insurance and Mortgage Insurance.  My customer did not make an offer on the house.

Click on the link below to figure a Mortgage Insurance Premium
Mortgage Insurance Calculator

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