Mortgage insurance today is not the taboo that it once was. Mortgage insurance today is less expensive than it has been and less expensive then obtaining a second mortgage for your down payment to get to the 20% total down payment point. Additionally, there are a number of ways in which you can structure paying for your mortgage insurance. Today you can adjust the amount of mortgage insurance you pay at closing as part of your closing costs which impacts the amount you will have remaining to pay in your monthly payment. The more you pay at closing upfront, the less you pay monthly. (HINT: if your contract to purchase real estate has the seller paying for some or all of your closing costs, do you not think it would make sense to put the majority or all of your mortgage insurance expense upfront as a closing cost, thus reducing or eliminating your monthly mortgage insurance expense?)
Mortgage insurance avoidance is not as important today as it used to be. The good news is you can still have that mortgage insurance removed on a conventional loan fairly easily. Once you achieve a certain amount of equity in your property, either by prepayment of your loan or by appreciation, I would suggest you make the call to your loan servicer to discuss having it removed.
To summarize, there are essentially three things you need to check with your lender or investor about regarding your mortgage insurance scenario. First is you need to see what the amount of mortgage insurance will be for your specific mortgage request; basically, get a quote included in your good faith estimate. Next, you need to ask your loan officer when, as in minimum amount of time, will you be eligible to have that mortgage insurance removed. Lastly you should ask what level, with respect to your equity position in the property, you have to achieve in order to have your mortgage insurance removed.
I think you will be pleasantly surprised at the number of ways in which your mortgage insurance can be handled and the resulting financial impact on your closing costs and monthly mortgage payment. Be sure to explore more than just the traditional options you may have known or heard about in the past. Hope you find this helpful and another way to Empower you to Manage your Mortgage.
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