When Is It Cheaper to Pay for Mortgage Insurance Rate Rather than Save a Larger Deposit?
The lending industry in 2021 is far different from the one before the 2000s. As the economy shifted so did the borrowing capacity of the public. As the public’s borrowing capacity waned, lenders felt the brunt of it.
Since 1986, Mortgage House has provided alternative solutions for individuals that don’t meet the full financial documentation standards of the industry. This opens the homeownership doors to more people, including first-time homebuyers, small business owners, and independent contractors.
For example, sometimes it is cheaper to take on the mortgage insurance fee instead of placing a deposit on a home.
A 20% deposit on a $500,000 home equals $100,000. On the other hand, to find the mortgage insurance fee, multiply the rate by the home loan’s amount. The average insurance fee ranges between $1,500 to $3,000 annually. Over 30 years, this equals $90,000 at the high end.
The exact numbers depend on the lender’s rate and the homebuyer’s financial circumstances. However, sometimes it’s worth opting for the insurance rather than waiting to save for the deposit. Try our mortgage calculator for more information.
Essentially, the lender’s mortgage insurance allows the homebuyer to become a homeowner sooner. In many circles, the belief is that it benefits the homebuyer. As a homeowner, they start building wealth. Then they can leverage their home’s equity to improve their financial position.
Mortgage Insurance Conclusion
Non-bank mortgage lender Mortgage House has remained at the forefront of innovation in the lending industry. Sometimes it’s cheaper to pay for mortgage insurance than place a deposit on a home purchase. Our loan specialists have the tools to advise homebuyers on their options. Contact our team today.