With the current mortgage insurance longevity associated with a FL FHA loan (FHA requires mortgage insurance for the life of the loan when putting the lowest allowed down payment and seeking a 30 year fixed rate mortgage), and many home buyers are requesting better options.  Now that more and more FL home buyers are seeking conventional Fannie Mae or Freddie Mac backed mortgages, I want to share the available private mortgage insurance, or PMI, opportunities.

Private mortgage insurance is required when a buyer is putting less than 20% towards down payment on their new home purchase.  And the less towards down payment, the higher the monthly PMI requirement and overall mortgage payment.  Mortgage insurance is generally calculated based on down payment and credit scores.  A 5% down payment will have a higher monthly PMI payment than say a 10% or 15% down payment.

The best part, no matter how much you are using for down payment, is that there are several ways to pay the mortgage insurance.  You can simply pay monthly (everyone knows that).  You can also elect to pay part upfront at closing.  This will reduce the monthly amount.  For example, you can pay 1% or more of the loan amount at closing to reduce your monthly payment.  In fact, you could choose to pay the PMI upfront all at once.  This option removes the monthly payment entirely which reduces your mortgage payment and may help in qualifying for your FL mortgage.  In fact, we closed on a new construction home loan with Viera Builders last month, and the buyers chose to pay their PMI upfront.  This saved them over $230 monthly and kept their qualifying debt ratios from exceeding guideline requirements.

The bottom line is making sure you are speaking with an experienced Loan Officer and one who will share more options to help you or your buyers make the best decision with their new home purchase.  If you or someone you know is buying their first or next home, and needs sound FL mortgage solutions with options and answers, please have them contact me at 800-333-3004 ext. 3560.  Thanks

Stephen Thaggard, NMLS 356309,  Sr Loan Officer, licensed in Florida,

Embrace Home Loans, NMLS 2184,  5500 Murrell Road Suite 201, Viera, FL 32940