BENEFITS OF MORTGAGE INSURANCE

1

BENEFITS OF MORTGAGE INSURANCE

• Presented by:

• MGIC, Suzanne LaCaria, Senior Account Manager

• Essent, Donny Rosenthal, Senior Account Manager

• Radian, Randi Gocinski, Senior Account Manager

2

Private MI Premium plans

• Monthly

• Singles - Borrower-paid - Lender-paid

• Splits

3

Monthly Split Single

Borrower-paid Lender-paid

Upfront premium No

HybridVariable up-front

with lower monthly renewal

Yes Included in rate or origination fee

Monthly premium Yes No No

Cancellation Yes YesTypically not with non-refundable

premiumsNo

RefundabilityNothing –

collected in arrears

No Not typical, but is an option No

4

Monthly MI

• Paid monthly w/mortgage payment

• Versatile

• May be cancelled

• No up-front costs

5

Single Premium – Borrower-paid

• Premium paid up front or financed into the loan amount

• Paid by borrower, seller, builder or 3rd party

• Portion may be refundable when cancelled (if refundable premium option is chosen)

• Be aware of maximum CLTV depending on who loan is being sold to

6

•Paid by lender or 3rd party

•Lender recoups cost via– Higher interest rate– Fees

Single Premium – Lender-paid

7

Splits

• Up-front premium combined w/lower monthly renewal

• Up-front premium may be paid by borrower, 3rd party or financed

• May be cancelled

8

MI Cancellation – original value

Automatic Termination @ 78% LTV78% of original value, based solely on the initial amortization schedule

Borrower requested @ 80% LTV 80% of original value, based solely on the initial amortization schedule

OR on the date the loan balance actually reaches 80% of the original value:

no subordinate liens good payment history

borrower must satisfy Lender’s requirement property value has not declined

9

MI Cancellation – current value

Fannie Mae and Freddie Mac typically require:

the loan must be seasoned at least 2 years AND the borrowers have an acceptable payment

history AND the LTV based on a current appraisal is:

75% LTV or lower if less than 5 years have elapsed since the loan originally closed OR

80% LTV or lower the LTV if more than 5 years have elapsed since the loan originally closed

Conventional MI vs. FHAIt’s All In The Numbers

11

FHA to Increase MIP

FHA to increase the Annual MIP by 10 bps. Effective for case numbers assigned on or after April 9, 2012.

FHA to increase the UFMIP.Effective for case numbers assigned on or

after April 9, 2012.

Term > 15 YearsBase Loan Amount

LTV Effective Annual MIP

Any Amt < 95% 4/9/2012 1.20 %

Any Amt > 95% 4/9/2012 1.25 %

Term < 15 Years with LTV above 78%

Any Amt < 90% 4/9/2012 .35 %

Any Amt > 90% 4/9/2012 .60 %

Increase in FHA Upfront MIP

Currently Effective April 9, 2012

1.0 % 1.75%

Effective June 11, 2012; FHA to add additional 25 bps to mortgages with base loan amounts exceeding $625,500.

12

MI Payment Comparisons

What you get with BPMI Monthly

No Upfront Premium Rate 1.75% Upfront Premium Rate

Loan Amount $360,000

Upfront Premium Amount ----

Total Loan Amount with upfront premium $360,000

Monthly MI Renewal Rate .59%

Monthly MI Premium $177

P&I Payment $1,719

P&I + MI $1,896Assumes: Purchase transaction with a 30 year FRM , a 4.00% interest rate on Radian BPMI and 3.75% interest rate for FHA, 760 FICO

What you get with FHA

Radian’s BPMI Monthly vs. FHA on an 95% LTV

MONTHLY SAVINGS of $160!


Upfront FHA Premium (Financed) $6,300


Monthly FHA Renewal Rate 1.20%

Monthly FHA MIP Premium $360

P&I Payment $1,696

P&I + MIP $2,056

Reflects FHA Rates Effective April 2012 and Radian MI Pricing as of May 1st, 2012

13

FHA BPMI MonthlySale Price $168,632 $183,158Base Loan $160,200 $174,000

Upfront Premium Rate 1.75% -----

Upfront Payment $2,804 -----

Gross Loan $162,904 $174,000

Note Rate 3.75% 3.875%

P&I Payment $755 $818

MI Rate 1.20% Per MI Company

MI Payment $160 Per MI Company

Total Monthly Payment $915 $915

Assumptions: 30 year amortization, 720+ FICO, Purchase, Reflects FHA Rates Effective April 2012


Sale Price

Total Monthly Payment

~ $14,500 More home for the same monthly payment!

BPMI Monthly vs. FHA on an 95% LTV

14


What you get with Borrower Paid Single

Conv. MI Upfront Premium Rate Per MI Co. 1.75% Upfront Premium Rate

Base Loan Amount $285,000

Upfront Premium Amount (Financed) Per MI Company


Monthly MI Renewal Rate n/a

Monthly MI Premium n/a

P&I Payment $1,369

P&I + MI $1,369


MONTHLY SAVINGS of $259!

Base Loan Amount $285,000





P&I Payment $1,343

P&I + MIP $1,628Assumes: Purchase transaction with a 30 year FRM, 740 FICO, Conv MI reflects note rate of 3.875 while FHA reflects note rate of 3.750

BPMI Single Financed vs. FHA on a 95% LTV

Reflects FHA Rates Effective April, 2012

15




Conv. MI Upfront Premium Rate per MI Co. 1.75% Upfront Premium Rate

Assumes: Purchase transaction with a 30 year FRM with a 740 FICO

BPMI Single Financed vs. FHA on a 95% LTV

More than 30% more home for the same monthly payment!

Sale Price $306,842

Base Loan Amount at 95% LTV $291,500

Upfront MI Rate Per MI Company

Gross Loan Amount (97.15% CLTV) $297,767

P&I Payment @ 3.875% $ 1,400


P&I + MI $1,400

Sale Price $258,000



Gross Loan Amount (96% CLTV) $249,389

P&I Payment @ 3.750% $1,155

Monthly FHA MIP Premium (1.20%) $ 245

P&I + MIP $1,400

Reflects FHA Rates Effective April, 2012

16




Conventional Upfront Premium Rate 1.75% Upfront Premium Rate

BPMI Single Paid in Cash vs. FHA on a 95% LTV

The same payment . . . ~$55,000 more buying power!

Sale Price $313,368


Upfront MI Rate (Paid in Cash) Per MI Company

Gross Loan Amount $297,700

P&I Payment @ 3.875% $1,400


P&I Payment $1,400

Sale Price $258,000



Gross Loan Amount $249,389

P&I Payment @ 3.750% $1,155

Monthly FHA MIP Premium (1.20%) $ 245

P&I + MIP $1,400 Assumes: Purchase transaction with a 30 year FRM, 740 FICO

Reflects FHA Rates Effective April , 2012

17

Assumes: 740 FICO, Purchase transaction with a 30 year FRM

What you get with Lender Paid Singles



Lender Paid MI Premium Rate4.25% Note Rate

1.75% Upfront Premium Rate3.75% Note Rate


Financed Upfront Premium Amount $0

Total Loan Amount $360,000



P&I Payment $1,771

P&I + MI $1,771

LPMI Single vs. FHA on a 95% LTV, with .5% increase

Monthly Savings of $285!



Total Loan Amount with Upfront premium $366,300



P&I Payment $1,696

P&I + MIP $2,056


18


LPMI Premium Rate4.25% Note Rate

1.75% Upfront Premium Rate3.75% Note Rate


Financed Upfront Premium Amount $0

Total Loan Amount $237,500



P&I Payment $1,168

Assumes: 740 Fico, Purchase transaction with a 30 yr FRM.

What you get with Lender Paid Singles What you get with FHA

P&I + MI $1,168 P&I + MI $1,357

Monthly Savings of $189!



Total Loan Amount with Upfront premium $241,656



P&I Payment $1,119

LPMI Singles vs. FHA on a 95% LTV, with a .75% increase


19

Close More Loans

Based on a 30-year 95% LTV loan, a base loan amount of $285,000 and a FICO of 720;interest rate is 3.75% for BPMI and 3.25% for FHA (Based on April 2012 FHA MIP Increases)

$1,200

$1,250

$1,300

$1,350

$1,400

$1,450

$1,500

$1,550

$1,600 $1,547

$1,479

$1,415 $1,402 $1,353

$1,320

Lower Monthly Payments

20

Qualify More Borrowers

$240,000

$250,000

$260,000

$270,000

$280,000

$290,000

$300,000

$310,000

$320,000

$252,200

$285,430 $293,848

$302,344 $307,919

$312,137 More Purchasing Power

Same Monthly Payment of $1,301

21

BENEFITS OF MORTGAGE INSURANCE

• Presented by:

• MGIC, Suzanne LaCaria, Senior Account Manager

• Essent, Donny Rosenthal, Senior Account Manager

• Radian, Randi Gocinski, Senior Account Manager

BENEFITS OF MORTGAGE INSURANCE

Documents

Transcript of BENEFITS OF MORTGAGE INSURANCE