Drastic Changes to Mortgage Insurance and How this can Help Your Purchase

Transcript

Hello everybody. Today at Texas Home Loans, we’re gonna talk about the big changes in mortgage insurance, how that affects you and how a lower down payment might be a better use of your money due to these drastic changes. So there’s been some pretty large changes behind the scenes of mortgage insurance, which I noticed.

That people aren’t really talking about. And one of the reasons they’re talking about is it presents a risk. So I’m gonna explain to you the tiering system that’s now in place as opposed to the old system and then why they’re not advertising this. So the old system was a very simple system. There was either mortgage insurance or not mortgage insurance.

And everybody who needed mortgage insurance was towards anybody less than 20% down. Had to pay this monthly fee. Until it gets removed. With conventional, with f h A, it stays on if you do the three and a half percent now forever to, for 30 years. So you’re looking at a situation where the mortgage insurance was very expensive.

It was deemed as a bad thing, and at the time it was a bad thing. The mortgage insurance companies got hurt really bad during the last crash. And I’ve noticed different pricing that came out. And I’ve also noticed incentives offered to me as a business owner that I don’t take. And because of that, my mortgage insurance is much cheaper than our lenders.

Sometimes it’s two to three times as cheap. So for example, if you buy a $500,000 home and you put 5% down with me and you’ve got a seven 80 FICO score, the mortgage insurance is $63 a month. I mean, not free, but extremely low. That same mortgage insurance used to cost, used to cost $209 per month. So what’s happened is they’ve given better risk criteria to higher FICO people.

Not all lenders will pass that on to the consumer. They use that as a profit added item. This is only what I’m assuming because. I’m offered the same rates as anybody else yet the rates are $150 for that scenario, or $200, $250 per month. And where is this extra money going because the insurance only costs 63.

So maybe the other lenders will say, oh, we’re not making this a profit item and we’re not gouging the consumer. But if you’re making passively a couple hundred dollars more per month doesn’t look good. Doesn’t look good, folks price it out. My customers have been very shocked at how low the mortgage insurance is.

I just don’t add any fluff to it. I don’t add any profit margins to it. That’s the only difference between me and the other lenders. But that’s one thing you really have to watch out for. If you’re doing less than that. Also, if you, even if you have good credit and you’ve got 20% down, it’s $63 a month.

That saving that 15% in your pocket. You know, that’s $75,000 in a $500,000 purchase. That 75 thousand dollars could make you a lot more in interest or investments than the $63 per month costs you. So it really opens up the possibilities. It kind of, it’s not that Morgan Insurance is become good, it should becomes much more affordable, and it’s really become a matter of where to put your money.

Where’s the return of mon on your money? And so they’ve made a graduated. The, the pricing buckets are 6 60, 6 8700, 7 20, 7 47, 67 80. And as your FCO scores go up, your mortgage insurance gets much more affordable because you’re a lower risk. It’s any insurance. Just like life insurance for young people is cheaper than all, all older person.

It’s less risk to the insurer. So if you think about it like that it’s really worth it to get your credit scores up, do whatever you can, pay your things on time, pay your mortgage. Not your mortgage, but your credit cards down. Your available balance hits your credit card. FCO scores a huge amount.

If you want some help with that, gimme a call. I can walk you through the entire credit process. I can tell you the algorithms. It’s a little bit tricky. TransUnion, Experian, and Equifax are a little bit Not user friendly cuz they’re profit driven. They’re not there to help you. They’re there to make money and a lot of times it’s the help creditor.

It’s not you. We, I can, but I can give you the information so you’re armed to get the best credit scores so you can get the lowest mortgage insurance and give you the best down payment options. Hopefully this helps you, helps explain that changes in mortgage insurance it rewards those with the high FCO scores.

And if you do have a good very high FCO score this could make it very affordable and we can go through all the different scenarios, the 5% down, 10%, 15, and all the way down to 20. We compare the monthly payments and also the mortgage insurance payments and see what fits your purchase the best. Feel free to call us anytime and hopefully this helps you out in your decision.