3/10/2010 11:13 PM
Let's face it. No one likes paying private mortgage insurance. For most people, it's nearly a four-letter word. But without it, all buyers would have to put down 20%. Thus, it's a necessary evil for most buyers. Fortunately, the mortgage insurance companies are back to innovating, and come up with a fantastic alternative to monthly mortgage insurance: it's called Single-Premium Mortgage Insurance (MI). It could save you thousands, and lower your monthly payment dramatically.
Here's how it works. Instead of paying monthly premiums, you pay one lump sum up-front. On a refinance, that lump sum can be financed into your loan. On a purchase, the seller can also pay for it. Typically that lump sum is equivelant to about two years worth of montly mortgage insurance, and monthly premiums can sometimes last longer than 10 years. APRs on loans with Single-Premium MI are dramatically better than those with monthly MI.
In the coming months, we plan to introduce an MI Comparison Tool into our site that will allow you to compare (on the fly) between monthly and Single-Premium MI to determine which is better for your specific situation. For now, please ask your loan officer to run that comparison for you.