refinance CastaicBUYING A HOME with a 10% DOWN PAYMENT  

Under normal circumstances, if a borrower puts 10% down on a $200,000 home they would be borrowing $180,000 and have a monthly payment of $966 (at a 5% interest rate), plus would be required to pay an additional $93 monthly mortgage insurance fee.If you did a refinance Castaic in the last few years you might not have the equity to buy a new home.

With LPMI, the $93 monthly fee can be eliminated altogether. If the borrower has a credit score of over 600 points, they can pay a one time fee and include that fee as one of the closing costs.

For example, on a purchase of a primary residence, a borrower with a credit score of over 660 points, who borrows between 85% and 90%, will pay about a 1.25% fee. If they are buying a second home there is an additional cost of .6%.

The credit score is the primary factor that determines the LPMI fee charge and there is a matrix that I can go over with you. The fee, with scores between 600 and 699, can be pretty expensive. Any score over 700 will get the lowest fee available. There are separate brackets for borrowers borrowing 85%, 90% and 95%, with 95% (a 5% down payment) being the maximum one can borrow.


However, the best part of LPMI is that if the seller is willing to pay the closing costs on the sale, and sellers are allowed to pay up to 3% of the closing costs at this time, in our previous scenario, (a borrower puts 10% down, has a credit score of over 760 points, and so is being charged a 1.25% fee to cover the mortgage insurance), it is acceptable for the seller to include this 1.25% fee as a part of the closing costs they are willing to pay.

Not only is it possible for the seller to take responsibility for this fee, but it still leaves 2.75% remaining that the seller can pay towards the rest of the closing costs. Further, 2.75% should, under most circumstances, pay for the remaining closing costs of the loan, thereby allowing the buyer the opportunity to purchase a home with 10% down and end up paying $0 in closing costs on their loan.

While it is unusual for a seller to pay a full 3% of the closing costs, in this buyers market, a motivated seller has been known to pay a set amount (like $3,000) of the costs, or a set percentage (like 2% to 3%) of the loan amount. Even this can help offset some of the initial costs of buying a home.

Regardless of what the seller pays, in the long run it will be financially better to pay the one time LPMI fee as a closing cost than to have to pay $93 extra each month. If you LPMI fee ended up being 1.5% on a $200,000 loan, your extra cost would be $3,000. Without using LPMI and paying an extra $93 per month after 12 months you would pay $1,116 extra per year. After 2 years and 8 months the LPMI charge will be paid in full.

If you are Purchasing a new Home or Refinancing a home with less that 20% down or Equity, contact us to learn about MI programs you can use to qualify for a new mortgage.Doing a refinance Castaic will be easy with our advice.

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