Looking for ways to avoid mortgage insurance?

Here are two loan programs that you can utilize to avoid mortgage insurance even if you don’t have a 20% down payment.

Mortgage insurance = insurance you pay with your mortgage payment that insures the lender against a loss on the loan (e.g. a default on the mortgage)

When buying or refinancing a home with than 20% equity/down payment in the property, you will have to pay an additional fee for mortgage insurance with your mortgage payment. The amount of monthly mortgage insurance you have to pay is largely dependent on the amount of equity you have in the property.

For example, if you are a first-time home buyer and you plan on putting 5% as a down payment, you will most likely be paying more in mortgage insurance than if you were to put 10% of the property value as a down payment.

Typically the only way to avoid this mortgage insurance payment is to put a 20% down payment on the house when you buy it. However, did you know that you can put as little as 10% down and not have a mortgage insurance payment?

Two of the most common ways that this can be done are through an LMPI (Lender Paid Mortgage Insurance) Loan and through an 80/10/10 loan.

The Lender Paid Mortgage Insurance Loan (LPMI) allows home buyers to avoid their mortgage insurance payment by putting at least 10% down on the property. With this type of loan, interest rates are typically around .25% – .375% higher than if you were to typical 10% down loan with a mortgage insurance payment.

Another method of avoiding the mortgage insurance payment is to apply for an 80/10/10 loan. With this loan 80% of the home value is put on a 30 year fixed mortgage, 10% of the home value is put on Home Equity Line of Credit (HELOC), and the other 10% is the down payment that you would have to make.

This method typically works best for homeowners who have good credit, as the minimum credit score requirement is 700+.

These are just two of the most common methods of avoiding mortgage insurance, however if you want to find out all of your options for reducing your mortgage payment, feel free to give us a call at 1-800-676-1300.

Why is my credit score low?

3 Reasons Credit Score Stinks

Have you recently run your credit and found that your score is much lower than expected?

Well, here are 3 reasons credit score stinks.

Foreclosure / Short Sale / BK

If you’ve had any of the these recently, it can dramatically impact your credit score in a negative way.

Mortgages are typically the largest loan amount that someone has in their lifetime.

When a person defaults on their mortgage it can disqualify them from getting another mortgage for up to seven years.

Bankruptcies can also have a large negative impact on your credit scores.

Bankruptcies can prevent the applicants from getting a new home loan for several years.

Those who declare Ch.7 Bankruptcy will wait at least two years from the discharge date to apply for a new home loan.

Collections/Judgements

Collections will most likely lower your credit score when the collections are not being disputed.

However, collections are not typically included in the credit score when they are disputed.

If you plan on applying for a home loan, keep in mind that banks will typically want you to un-dispute any collections that appear on your credit report before funding a loan.

Credit Balances > 30% of Line Amount

Having some credit debt can be good for your credit scores. However, having too much credit debt in relation to your line amount can cause the credit scores to drop.

The three credit bureaus (Equifax, TransUnion, Experian) will typically adjust your credit score lower whenever there is a credit line that has balance of over 30% of the line amount.

With this in mind, if you’re going to apply for a home loan don’t completely pay off your credit lines to a zero balance.

But rather, pay these credit balances down to under 30% of the line amount and you’ll have a better chance of getting a high credit score.

For more in-depth tips on how to improve your credit score, visit www.accloans.com. Feel free to check out some of our other posts covering everything from appraisals to tax deductions here: www.lionsgatereg.com/blog