Preparing to become a homeowner is satisfying and an exciting financial milestone for anyone. However, the home buying process is complex and full of curveballs, making it one of the most challenging feats. Once you settle to buy a home mortgage insurance, you may end up facing various obstacles to hinder you from buying your home.

In this post, we demystify the concept of mortgage insurance in the best way possible. We will help you understand what it is and its benefits, so you can easily communicate with borrowers who may be hesitant about single-premium PMI. In reality, it is nothing to be afraid of and is a policy that will help you and the home buyer.

What is Private Single-Premium Mortgage Insurance?

Single-Premium Mortgage Insurance is a form of private mortgage insurance (PMI) that allows borrowers to purchase their mortgage insurance in one lump sum. The homeowner can pay the mortgage insurance premium upfront as a single premium, ultimately avoiding any monthly PMI payment.

While this will require more cash down payment upfront, over time it could save the homebuyer money if the homebuyer stays in the home longer than 4-5 years and doesn’t refinance during that time. The homebuyer pays for the buyout in cash or adds it to the loan amount, qualifies to borrow more, and gets a home with a single payment.

Typically, you have to refinance your mortgage or go through a new appraisal process to remove monthly PMI, but once you pay the single PMI, you don’t have to worry about refinancing preventing you from paying your PMI. There is no more loan-to-value ratio that you need to check on when the PMI gets canceled.

On the other hand, loan officers also face a variety of challenges when offering these single-premium mortgages. With the various myths on this insurance, most clients may not understand the true benefit of using them. As a loan officer, you should make your borrowers excited about this type of mortgage insurance and all the benefits that come with it.

Other challenges in the industry for most loan officers include how to retain competitiveness while attracting new brokers. There are over 100 mortgage wholesalers in the U.S., and the competition can be stiff. During this era where most millennials require fast services online, it is best to leverage digital processes to reach out to prospects and offer services online.

Also, as a loan officer, you need to add value to your clients’ experience using various tools that improve efficiency and offer client-focused services. Ensure you update your technology and provide affordable PMI that allows you to stand out in a competitive field.

Still, getting past borrowers’ preconceived notions surrounding single-premium PMI is no easy feat. Learn how to overcome these myths below so you can begin establishing trustworthy relationships with borrowers.

Don’t Trust the Lies

Unlike traditional insurance, the borrower pays for the PMI instead of the lender. However, this leaves many buyers wondering if it is an effective method to buying their homes. Here are some of the myths about PMI and the truth.

Borrowers Need a 20% Down Payment

The requirement is a common misconception among most first-time homebuyers who need to save up to a certain amount to make a down payment. Others believe that they need to have a sizeable down payment as the best way to avoid paying PMI.

However, this is far from the truth. There are also options of purchasing your first home with as little as 3% down. Down payment requirements and their related PMI requirements are different for every loan program you choose to use.

Private Mortgage Benefits Lenders Only

When you delay purchasing your home, you risk using more money when you finally decide to take the step. With single-premium PMI, you increase your chances of owning a home by 20%. The faster you purchase your home, the sooner the homeowner will start creating equity in their investment to leave you mortgage-free.

Borrowers Will Pay Private Mortgage Insurance Constantly

All mortgage insurance policies have expiration dates that have nothing to do with the calendar. You only pay the necessary mortgage loans. Also, the Homeowners Protection Act only allows for the removal of PMI under certain circumstances. You have control of what you need to get. Potential lender servicers provide details about the removal of PMI before you take the loan.

Private Mortgage is Too Expensive

Most first-time homebuyers may not know the factors that affect the cost of PMI. The cost of mortgages varies from about 0.19% to 1.5% of the total amount. Also, the insurance coverage varies from one lender to another. Other factors that can influence the cost of a mortgage and the down payment include:

  • The state where you would wish to buy a home.
  • Your credit score value.
  • The loan-to-value ratio of the home.
  • The down payment amount.
  • Loan period.

A PMI Tool for Lenders

The position of a lender is challenging, with the need to source varied PMI quotes to offer the best rates to their clients. It gets even more affected when clients require customized services. Other clients require special services, and delivering what they need will enable you to retain them.

As most businesses start operating online, it creates a red ocean situation. Lenders need to act smart to take advantage of the competitive landscape. There is also a need to access all quotes and offer their clients unmatched rates for higher leads that convert to sales.

With PMI Rate Pro, lenders will enjoy seamless integration of all mortgage technology systems they use for their service. They get instantaneous value for their clients by offering the lowest rates possible, setting them apart from the competition. It is the most affordable PMI tool to look out for and stay in the lead.

In Conclusion

Finding the right quotes and saving your clients thousands is not easy without the right partner. You need to offer the best services and leverage the stiff competition effectively.

PMI Rate Pro is your one-stop solution to manage all your services effectively. With single-premium insurance, clients enjoy a variety of benefits while reducing the cost of their mortgages. Ready to start offering quality services right away? Contact us now to get started.