Mortgage insurance is typically mandatory when a home owner borrows more than eighty percent of the value of a home. It protects lenders against financial loss should a homeowner fall short of paying a mortgage. Although it protects the lender, it is usually paid by the buyer as an up-front fee and additional monthly premium. In certain cases, a lender will cover the expense of the mortgage insurance. This article provides an overview of lender paid mortgage insurance for Boston home loans.
An Overview Of Lender Paid Mortgage Insurance
Some mortgage companies will provide lender paid mortgage insurance loan alternatives for a higher interest rate. When a homeowner pays mortgage insurance themselves, it remains in place until the loan is paid down to around eighty percent of the purchase price or current market value. So eventually, the monthly payment reduces when mortgage insurance is no longer required. With lender paid mortgage insurance loans, this drop in monthly payment does not occur since the higher interest rate continues for the life of the loan. The only way to change it is to refinance.
Choosing Between Owner Paid and Lender Paid Mortgage Insurance
Even though the interest rate on lender paid mortgage insurance home loans may be higher, it may still result in a lower monthly payment for certain buyers. Furthermore, some homeowners can not deduct mortgage insurance expenses on their taxes whereas mortgage interest is usually tax deductible. Therefore, opting for an increased interest rate and lender paid mortgage insurance might also lead to greater tax savings for some homeowners.
Help with Boston Home Loans
Lender paid mortgage insurance options can be a better option for some buyers. It is important to compare it to other options and understand the short term and long-term differences. The above is an overview of lender paid mortgage insurance for Boston home loans and is provided only as an introduction. For a list of reputable local mortgage companies, contact Bill Kuhlman at Kuhlman Residential via phone at 781-444-1399 or email firstname.lastname@example.org.