Arizona Mortgage Insurance Options

Arizona Mortgage Insurance Options

The way that a home buyer pays for their mortgage insurance varies significantly depending upon the type of loan they use and in some cases personal preference.  It is important that your Arizona Mortgage Lender helps you understand what your mortgage insurance options are.  Let’s start by taking a look at what your options are loan type by loan type.

Conventional Financing Mortgage Insurance

When is Conventional mortgage insurance paid?
Conventional mortgage insurance is paid anytime a homeowner does not have 20% equity (example of 20% equity: If homeowner’s home is worth $300,000 and their mortgage balance is $240,000 they have 20% equity – $300k x’s 80% = $240k leaving 20% in equity).  When utilizing a Conventional loan a homeowner may have 3 different options to choose from when it comes to paying mortgage insurance.  I will cover these in more detail in future articles however lets run over them each in short:

1. Borrower pays mortgage insurance monthly
2. Borrower pays mortgage insurance by increasing their monthly interest rate and NOT in their monthly payment
3. Borrower finances mortgage insurance into their loan amount and does NOT pay a higher rate nor do they pay mortgage insurance in their monthly payment

FHA Mortgage Insurance

When is FHA mortgage insurance paid?
FHA mortgage insurance is paid regardless of how much money a borrower puts down on their purchase.  When utilizing an FHA mortgage a homeowner pays mortgage insurance on a monthly basis.  They also pay a one time up-front mortgage insurance premium that is financed into their loan amount when they close on their purchase or refinance.

VA Financing

When is VA mortgage insurance paid?
Mortgage insurance on a VA loan is a bit different from FHA and CONVENTIONAL mortgage insurance.  VA calls mortgage insurance a “VA Funding Fee.”  The VA Funding Fee is a one time insurance premium that is financed into a VA homeowner’s loan at the time they close their purchase or refinance.

USDA Financing

When is USDA mortgage insurance paid?
A borrower utilizing a USDA loan does not pay monthly mortgage insurance however they do pay a one time insurance premium called a “Guarantee Fee.”  This fee is financed into the borrowers loan at the time they close their purchase or refinance.

JUMBO Financing

Mortgage Insurance on a Jumbo loan depends upon the specific loan product and investor that we utilize for the buyer.

I will dig into some more detail in future mortgage insurance blogs and I will dive deeper into the advantages of each option.  Please let me know how I can help.

By Jeremy House

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  1. […] Mortgage insurance is paid in a variety of ways depending upon the type of financing being used, a borrowers qualifications (credit, debt to income etc…) and in some cases a borrowers preference.  Mortgage insurance may be paid in monthly installments, as a large one time up front premium, a combination of both or by increasing a borrower’s interest rate.  To make a bit more sense out of all these different options check out this link for a basic mortgage insurance break down loan type by loan type – HERE. […]

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