Calstar Mortgage Inc. assists homeowners in California with a variety of home financing needs. Today we want talk about mortgage insurance and what it means for you as a homeowner. First, it is important to understand that mortgage insurance is designed to protect lenders. If a borrower defaults on their mortgage, insurance compensates lenders for their losses. In addition, it can help you qualify for a home mortgage if you don’t have the savings to make a large down payment. If you are seeking a home in the Tampa area, and require mortgage insurance, there are many great solutions.
How Does Mortgage Insurance Work?
Mortgage insurance is standard with many types of home loans and can be required on others if certain requirements are not met by the homebuyer. This type of insurance is typically requested if you do not have much money for a down payment. It helps lower the risk for the lender making the loan, and it helps you qualify for a mortgage that you otherwise may not be able to get. If you have less than twenty percent down payment for the home, then you may need mortgage insurance. Premiums can be rolled into your monthly payments, closing costs, or both. Various types of mortgage programs also come with their own type of insurance requirements and options.
Mortgage Insurance and Various Loan Programs
Depending on the type of home loan you are looking for, mortgage insurance may be mandatory. In some cases, it may not be needed at all. Here are some common loan types and their mortgage insurance requirements.
-FHA Loans: If you get an FHA Loan (Federal Housing Administration Loan) then you will be required to have mortgage insurance from the FHA. You will need to pay an up-front premium as well as a monthly premium. Costs for this type of insurance will generally be consistent and predictable, unless you have a very low down payment.
-Conventional Loans: If you get a conventional loan, then the lenders might request private mortgage insurance. With this, the rates can be dependent on your credit score. You may also be able to cancel the insurance down the line after you have built sufficient equity in the home.
– VA Loans: One of the advantages of the VA Loan (Department of Veterans’ Affairs VA-backed loan is that you are not required to pay mortgage insurance. You may need to pay other fees that will be tacked into your monthly mortgage payment.
We hope this was helpful in answering some of your questions regarding mortgage insurance. If you want to learn more or have any questions, contact Calstar Mortgage Inc. in La Cañada Flintridge today!