New Underwriting Guidelines for getting a Mortgage Today

Deciding which house you want to buy and putting in an offer is confusing enough, so when it comes to choosing a mortgage, with so many options available, it is easy to get overwhelmed. It might make you feel better to know that by getting mortgage insurance, you may actually be able to get a lower interest rate on your mortgage. There are probably a few things you need to know that you don’t already, but the process is not nearly as intimidating as it appears to be.

The reason that insurance exists is for protection. If for some reason you are unable to cover your monthly mortgage payment, mortgage insurance provides a way for the lender to protect their investment and reclaim their losses. For this reason people who choose to have mortgage insurance are generally able to qualify for a lower down-payment on their property, as the lender has less risk involved in their investment.

There are two different types of mortgages: lender-paid or borrower paid. In both types of loans the payment will remain the same throughout the life of the loan, and both types of loans do offer tax benefits, but there is a catch. If the mortgage insurance is paid for by you, the borrower, you must make under 100,000 to qualify for the tax deduction. With a lender-paid option, you will receive a tax deduction no matter your income level. There is another important difference between these two types of mortgage insurance.

If you are planning to live in the same house for the life of your loan, it is important to understand that in a borrower-paid format your monthly payment will, eventually, end.
Once you have paid off your mortgage to the level specified by your lender, usually around 80%, you will no longer have to make a payment each month. On the other hand, with lender paid insurance, while your monthly payment will probably be lower, you will have payments indefinitely.

As you can see there are tradeoffs when choosing the type of mortgage insurance that you would like, but this decision can be made easier. It helps to consider your goals, both long term and short term regarding your investment. This will help you weigh the benefits and drawbacks of both paying a monthly mortgage payment, and deciding which type of mortgage is best for you.