In Episode 17 of the Intelligent Equity Podcast, host Ryan Kiefer talks with Rob Deters of MGIC Mortgage Insurance. Rob demystifies mortgage insurance by explaining how it can help first-time home buyers get into a house sooner. Learn about the different types of mortgage insurance that are available, how to remove the insurance and the difference between conventional and FHA loans.
Episode Highlights:
- Rob was in the wholesale lending business for 15-20 years. He joined MGIC six years ago.
- Mortgage insurance can actually be a great thing when you’re buying a house.
- You do not have to put 20% down.
- If you put down 10-15% instead, then you’ll have the extra to cover costs like replacing the carpet or buying new appliances.
- Mortgage insurance is much cheaper than it was in the past.
- There are different ways to pay for mortgage insurance.
- Monthly is the most common way to pay for it.
- When you pay monthly, nothing is due at signing which lowers closing costs.
- There’s also the borrower paid single premium option.
- If you’re going to be in your house for more than four years, the single premium option is worth considering.
- There’s also lender-paid mortgage insurance which carries a higher interest rate and is more expensive than the other plans.
- Rob describes how someone can cancel mortgage insurance and when it automatically falls off.
- Not all lenders require you to have your insurance for two years.
- FHA loans require a monthly payment and a one-time premium that’s rolled up into your mortgage.
- With FHA, you cannot cancel the insurance.
- You can put as little as 3% down. There’s also down payment assistance out there.
- Mortgage insurance can help you get into a house sooner.
- The money you put down is actually getting eaten up by inflation over time.
- MGIC’s Ready Nest website provides free educational resources for first-time buyers.
3 Key Points:
- Most buyers try to avoid PMI, but you don’t really need to put 20% down.
- There are three different ways to pay for mortgage insurance.
- The biggest difference between conventional and FHA loans is that you cannot cancel the insurance with an FHA loan.
Resources Mentioned:
- Ryan Kiefer: LinkedIn, Facebook, Website
- Rob Deters LinkedIn
- MGIC: Mortgage Insurance
- readynest.com