Do You Have Lender Paid Mortgage Insurance?

Mortgage Insurance vs. LPMI

 

Do You Have Lender Paid Mortgage Insurance?

 

When purchasing a home with a loan, in addition to this being a great idea, you are required to have homeowner’s insurance (sometimes called fire insurance or hazard insurance).  Contact your Insurance Agent to provide you with that type of coverage. When your loan to value is over 80% on your loan, mortgage insurance is typically required. 

 

Mortgage insurance is entirely different from other types of insurance in that it covers the lender against a loss.  There are several factors that determine the cost of mortgage insurance – FICO score, loan to value, and loan type.  The standard option for most buyers is monthly mortgage insurance.  There is, however, another excellent money saving option – Lender Paid Mortgage Insurance (or LPMI).

 

LPMI is paid by the lender by slightly increasing the rate.  Typically, the higher the buyer’s FICO score, the lower the cost of the LPMI.  Unlike most lenders that offer LPMI, Sierra Pacific Mortgage offers savings for borrowers beyond 740 FICOs.  If you are a higher FICO buyer requiring or currently having to pay mortgage insurance, then call us for a comparison—you’ll probably be able to save some money.

 

On a $400K purchase at 95% loan to value, the typical buyer with a 740 FICO will save over $135 per month over traditional monthly mortgage insurance.  In addition, LPMI may allow them to buy more house! 

 

Another benefit of LPMI is for borrowers that want to refinance out of their monthly mortgage insurance, but don’t have the 20% yet in equity to remove it.  LPMI bridges the gap to entirely remove the mortgage insurance up to 95% loan to value. 

 

As home loan interest is typically tax deductible and mortgage insurance is currently not, LPMI may provide additional tax savings too. Confirm with your tax professional.

 

For LPMI or other mortgage questions, call the Easterbrook Team at Sierra Pacific Mortgage.  John Easterbrook (NMLS#226555) and Patty Aguon (NMLS#994635) can both be reached at (916) 850-6050.  We can also be emailed at easterbrookteam@spmc.com.