If you plan on buying a house soon with less than 20% down:

For my real estate agent friends and followers or if you plan on buying a house soon with less than 20% down:

Most folks don’t know that mortgage insurance is VERY flexible. Let’s help fix that.

MI for conventional loans doesn’t just have to be paid monthly. It can be paid in many different ways.

MI is like your homeowner’s or car insurance. The riskier you are, the higher the rates. Higher credit scores, lower loan to value, lower debt to income ratios get better MI rates.

Here are the most popular MI options:

MI can be paid monthly (most common). MI can be paid one time upfront at close by the borrower. MI can be paid one time upfront by the lender. MI can be split up. Pay part upfront. Pay part monthly. (MI can also be paid by the seller as a closing costs contribution)

Here’s a recent example. $500,000 loan size. 90% loan to value. 700 credit score. Single family home. Slightly higher DTI.

The monthly MI was $145 per month. OR she could pay around $7,800 one time at close OR the lender could pay around $15,000 one time at close. OR she could split it up and pay $1,500 at close and lower the monthly payment to $127.

Why would anyone ever do the one-time?

Here’s why: Some folks can’t qualify with the extra monthly payment or they want a lower monthly payment for less financial stress or they just hate MI and don’t care about the one-time cost. They just want it gone.

In higher credit scores, one-time paid is an easier pill to swallow but let’s say you do the one-time lump sum payment at close. Then you decide to pay your mortgage down faster so you build 20% equity faster than the original amortization schedule. You can sometimes request a refund of the unused upfront MI that you paid.

Can be complicated. Make sure it’s “refundable” when you buy it and you will have to request the refund from the lender. Be sure to ask your lender for a refund schedule and details.

Bottom line: There’s a LOT of options with MI. Not just one.

Too many lenders don’t present loan options, or MI options because, in their opinion, “it’s a bad idea. Makes no sense. I wouldn’t do it.” They may be 100% right but that’s not their decision. The buyer should be presented with and make all of their own financial and loan decisions.

Content Credit for this post: Mr. Aaron Gordon