54 THE QUEENS COURIER • AT HOME • FEBRUARY 14, 2019 FOR BREAKING NEWS VISIT WWW.QNS.COM
at home
Mortgage insurance: Added cost to homebuying or smart way to get in?
Th e homebuying process is exciting,
but can also seem fraught with added
costs, like a home inspection, title insurance
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OFF FOR PURCHASES OF $5000 OR MORE
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718.544.2634 Fax: 718.263.2032
Total average savings of
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and closing costs. And if you can’t
aff ord a full 20 percent down payment
on a conventional home loan, then you
will most likely pay for private mortgage
insurance (MI). Some people consider
private MI yet another added cost, but it
helps creditworthy middle-income homebuyers
qualify for home fi nancing sooner
with a low down payment. Is it really an
added cost if it saves time and money in
the long run?
For most people, low down payment
home loan options include conventional
loans with private MI and government
backed loans like those off ered
by the Federal Housing Administration
(FHA). While comparable, each of these
options has important diff erences. For
example, the minimum down payment
for an FHA mortgage is 3.5 percent while
it’s only 3 percent on a conventional, privately
insured mortgage.
Another key feature of private MI is
that it can be canceled when a borrower
reaches 20 percent equity in his or
her home. Borrowers who purchase a
home with private MI can typically cancel
it within 5 to 7 years, resulting in their
monthly bill going down. Private MI’s
cancelability makes it a more aff ordable
option over FHA-backed mortgages,
which typically require mortgage insurance
premiums for the entirety of the loan
term. Both are off ered by most mortgage
lenders, so it’s smart to ask a loan offi cer
for both options so you can compare and
do the math.
Th e myth that a homebuyer needs 20
percent down to obtain a mortgage is
simply not true. Low down payment
mortgages are widely available and used
every day across the country. In 2018, the
National Association of Realtors found
that fi rst-time homebuyers typically put
down 7 percent, while repeat buyers put
down an average of 16 percent. Many
homebuyers choose a lower down payment
option to preserve some savings
for home improvements or save for other
goals. Th e time it could take to save up a
20 percent down payment is signifi cant.
On average, it could take up to 20 years to
save a full 20 percent, plus closing costs,
for a $257,700 house - the national median
sales price. With home prices on the
rise, the amount of time it takes to save
up could only increase. Private MI can
mean the diff erence between getting into
the home of your dreams sooner or waiting
for years.
For over 60 years, more than 30 million
homeowners of all backgrounds have
used private MI to successfully buy their
homes. In the past year alone, private MI
helped more than one million borrowers
nationwide purchase or refi nance a
mortgage. According to a study by U.S.
Mortgage Insurers, 56 percent of purchase
borrowers were fi rst-time homebuyers
and more than 40 percent had
incomes below $75,000.
For decades, millions of homeowners
and prospective homebuyers have relied
on private MI to help them aff ordably
and responsibly purchase their homes - in
turn helping them build personal wealth.
Today’s historically low mortgage interest
rates are a good reason to buy a home
now. It is estimated that in 2019, the average
rate for a 30-year fi xed-rate mortgage
will be around 5 percent. Borrowers
should take advantage of these historically
low mortgage interest rates because
experts forecast that primary mortgage
rates are on the rise.
Getting a mortgage with private MI
and keeping more of your hard-earned
money in the bank can be a very smart
way to invest in your future. Check out
lowdownpaymentfacts.org to learn more.
Courtesy BPT
/lowdownpaymentfacts.org
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