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Many times, Mortgage Insurance can be a necessary evil.  You will have mortgage insurance if you get a conventional loan and are putting less than 20% down payment.  And also if you go with a  FHA loan.  But, there is actually another option.  And it is the No Mortgage Insurance loan, otherwise known as Lender Paid Mortgage Insurance(LPMI).  To off set the lack of mortgage insurance the lender increases the rate(usually around .25% higher).  This program is based on guidelines of a regular conventional loan.  So you will need higher credit scores(680+). 

There are many benefits to this program, here are 3 major ones:

1.       Lower Payment-Let me give a quick example. On a $200k loan amount(95% LTV) with a rate of 4.25%(30yr) and mortgage insurance vs 4.5% with no mortgage insurance.  The loan with no  Mortgage insurance has a payment $82 less than the option with mortgage insurance.

2.       Mortgage Insurance is not tax deductible for you- Like I have discussed in the past, mortgage insurance is tax deductible thru 2011.  After 2011, who knows…..  It is only tax deductible if your family household income is $109k and less.  So if your household income is higher than that, mortgage insurance is not tax deductible for you. 

3.       Helping you qualify- I have actually used this program in the past to help a couple buy a home.  By using the NO Mortgage Insurance option they had a lower payment and were able to get approved.  While the mortgage insurance option did not let them qualify because of the higher payment. 

This program follows conventional loan guidelines, since it is a conventional loan.  And even thou it does not have mortgage insurance the lender will still underwriter it based on mortgage insurance guidelines. 

As you can see there are 3 major benefits to this loan.  When getting a mortgage it is important to know all your options.  The NO Mortgage Insurance loan option maybe the best mortgage option for you.  Please call or email me with any questions.