Mortgage insurance is typically required when a home owner borrows more than eighty percent of the value of a property. It protects mortgage companies against financial loss when a homeowner default on a mortgage. Although it is for the benefit of the lender, it is usually billed to a homeowner as a closing cost and additional recurring premium. In some cases, a lender will cover the cost of the mortgage insurance. This article important details on lender paid mortgage insurance for MA home mortgages.
Important Details On Lender Paid Mortgage Insurance
Some mortgage companies will offer lender paid mortgage insurance loan options for an increased interest rate. When a homeowner pays mortgage insurance directly, it remains in effect while the loan amount exceeds eighty percent of the original price or current appraised value. So at some point, the monthly payment is lowered when mortgage insurance is no longer required. With lender paid mortgage insurance loans, this drop in monthly payment does not happen since the higher interest rate applies to the full length of the mortgage. The only way to change it is to refinance.
Owner Paid vs. Lender Paid Mortgage Insurance
Although the interest rate on lender paid mortgage insurance loans may be higher, it might still result in a lower monthly payment for certain buyers. Additionally, some homeowners are unable to deduct mortgage insurance amounts on their taxes whereas mortgage interest is normally tax deductible. Therefore, selecting a higher interest rate and lender paid mortgage insurance can also lead to better tax advantages for certain buyers.
Assistance with MA Home Mortgages
Lender paid mortgage insurance loans can be a better solution for some buyers. It is important to compare it to other types of loans and understand the short term and long-term benefits. The above is important details on lender paid mortgage insurance for MA home mortgages and is provided only as an introduction. To be referred to a local reputable loan officer, contact Bradford Pratt at REMAX on the Charles via phone at 877-481-5544 or email firstname.lastname@example.org.