Did you know you can save homebuyers thousands of dollars by presenting them with a single-premium mortgage insurance option?
Single-premium private mortgage insurance can save homebuyers thousands of dollars by allowing them to pay for the entirety of their PMI upfront. Most loan officers know PMI as a monthly amount that is added to the borrower’s mortgage payment to protect the lender. However, single PMI is a cost-effective option for borrowers with extra cash at the time of closing.
As an example, Figure 1 breaks down the cost for a first-time homebuyer purchasing a $200,000 home with a 3% down conventional program:
With the monthly PMI option, the homebuyer will pay $67.90 every month for approximately 9.75 years (117 payments) with the total PMI costing the client $7,944.30.
Or, the homebuyer could purchase single-premium mortgage insurance at a discount upfront and never have to worry about paying PMI again. Sticking with our same example, the cheapest option for a single-premium PMI payment, at the time of research, was $2,580.
That’s right, we’re talking about potentially saving your homebuyer over $5,000! (see figure 2). In fact, for this scenario, the break-even between single and monthly PMI is 37 months ($2,580/$67.90). That means, if your client plans to be in their home longer than 3 years and 1 month, single PMI is a much smarter financial decision.
“Using PMI Rate Pro, loan officers can compare quotes from all six mortgage insurance companies, to offer the cheapest option from the beginning,” said, PMI Rate Pro Founder and Mortgage Expert, Nomi Smith.
In the storyline above, the highest quote for a single premium PMI was $3,400 and the cheapest quote was $2,580. Not only can you save your clients by helping them structure their PMI upfront, by using PMI Rate Pro you guarantee that you are offering the cheapest rates from the beginning, saving the homebuyer money on top of money.
Why Single PMI Isn’t For Everyone
Although it offers significant savings, there are a few reasons why single-premium PMI isn’t the best choice for some borrowers:
* If they don’t have the extra cash to pay upfront at the time of closing, monthly PMI is a more accessible option, although it will be more expensive in the long run.
* If they plan on making significant improvements to the home they can get an appraisal within a year to demonstrate enough equity to get rid of PMI altogether.
* The length of time they plan to stay in the home also factors into the decision of single vs. monthly PMI. If they plan to sell the home before they break-even, they cannot get a return on single PMI.
About PMI Rate Pro
PMI Rate Pro transforms the private mortgage insurance quoting process with innovative software that provides rates from every mortgage insurer in seconds, saving time and money. By providing accurate quotes for homebuyers in seconds, loan officers are able to win more deals while saving borrowers money on their insurance rates. The company was founded by Nomi Smith and Luke Landau, two tenured mortgage officers who recognized that homebuyers have been overpaying for private mortgage insurance for decades. For more information on PMI Rate Pro, visit www.pmiratepro.com.