Mortgage insurance is generally mandatory when a home buyer borrows more than eighty percent of the value of a property. It protects lenders against loss should a homeowner fall short of paying a loan. Even though it insures the mortgage company, it is usually billed to the homeowner as an up-front fee and additional monthly fee. In certain cases, a mortgage company will absorb the expense of the mortgage insurance. This blog important details on lender paid mortgage insurance for Abington PA mortgages.
Important Details On Lender Paid Mortgage Insurance
Some lenders will offer lender paid mortgage insurance loan programs for an increased interest rate. When a homeowner pays mortgage insurance directly, it remains in place while the loan amount exceeds eighty percent of the purchase price or updated appraised value. So eventually, the monthly payment reduces when mortgage insurance is no longer required. With lender paid mortgage insurance loans, this drop in monthly payment does not happen since the higher interest rate remains in effect for the full length of the loan. The only means to alter it is to refinance.
Owner Paid vs. Lender Paid Mortgage Insurance
Although the interest rate on lender paid mortgage insurance home loans may be greater, it may still result in a lower monthly payment for certain buyers. Additionally, mortgage insurance may not be tax deductible for all buyers whereas interest paid on a loan is normally tax deductible. Therefore, selecting a higher interest rate and lender paid mortgage insurance might also lead to better tax advantages for some homeowners.
Assistance with Abington PA Mortgages
Lender paid mortgage insurance loans may be a better option for some buyers. It is important to analyze the figures and understand the immediate and long-term differences. The above is important details on lender paid mortgage insurance for Abington PA mortgages and is intended only as an introduction.