November 27, 2017
Orion helps brokers do thousands upon thousands of loans every year that have mortgage insurance on them. And Orion’s AEs remind brokers to tell clients that mortgage insurance does not protect the borrower, it protects the lender. If someone has mortgage insurance and defaults, the MI company will pay a certain amount to Orion, or any lender, and this payment will help mitigate the loss the lender will incur due to the failure to pay a mortgage.
Our experienced brokers feel that it is important each one of their clients be fully educated about their loan choices, and discuss why MI might be a good option for them. There are a couple of reasons. If a borrower has limited funds to purchase a new home such that they cannot put 20% down, mortgage insurance gives them the ability.
Currently, MI rates are the lowest they have been in years. When the math is done on the long-term costs of the MI, leveraging the home purchase using mortgage insurance is preferred to cashing out investments to avoid the MI premium.
Orion’s brokers also explain to clients that if they have a conventional loan (usually through a Fannie Mae or Freddie Mac program) with private mortgage insurance, the insurance is not permanent and can be removed in the future. Should the market stay flat after they purchase their home and they make regular and timely payments, the lender must remove the mortgage insurance when the balance of the mortgage is at 78% of the "original value" of the property, i.e., the sales price or appraised value when the loan funded. It will generally take about six and a half years for this threshold to be reached. If one has a mortgage insurance contract that was written in 2006 or later, then mortgage insurance payments may be deductible depending on one’s income.
With Orion continuing to offer low affordable interest rates, MI premiums low, property values increasing in our footprint, and investment returns high, the opportunity to benefit from using MI to has not been better for families looking to purchase a home. Discuss the options with your Orion AE so that you can help your borrower!