Mortgage Update: August 16

Mortgage Insurance: The Key to Make Homeownership Happen Sooner

Today we're dismantling the misconceptions on mortgage insurance and sharing more about how it can be a tool that accelerates a buyer's ability to purchase and own a home. 

Mortgage insurance is a type of insurance typically required by lenders when a borrower puts down less than 20% of the home's purchase price. It's usually paid as a monthly premium that's added to the borrower's mortgage payment.

Mortgage insurance is designed to provide a safety net for the lender in case the borrower defaults on the loan. Though, many don't realize that it not only benefits the lender. Borrowers can strategically use mortgage insurance to invest in their dream home sooner. Instead of saving for a 20% down payment, private mortgage insurance empowers borrowers to secure a home with a significantly lower down payment (or even in some cases, no down payment!). 

To put it in perspective, consider this data from the latest USMI state-by-state report:

• It would take a median-income household 23 years to save up a 20% down payment on a $232,900 home (the median sales price for a single-family home in Michigan) – that number drops to 8 years for a 5% down payment.

• Mortgage insurance helped 37,103 people in Michigan become homeowners in 2022

• 63% of them were first-time homebuyers

Mortgage insurance is more than a safeguard for lenders. It's a valuable resource to help borrowers navigate and succeed in the current housing market. And, contrary to prevalent misconceptions, mortgage insurance pricing is remarkably competitive and affordable, too. 

The best course of action is to connect with your loan officer, who is well-versed in mortgage insurance and can help share more informed guidance on the best path forward. Please reach out to mortgages@johnadamsmortgage.com.

Our team wants to give a special thank you to Brian Karaszewski, Account Manager at Mortgage Guaranty Insurance Corporation, for sharing his expertise and knowledge on mortgage insurance with us in this video.