Lender Paid Mortgage Insurance (LPMI)

When it comes to the words “mortgage insurance," many people have a negative reaction to it because they think it is “bad.” Is mortgage insurance bad? Maybe, maybe not. But one thing many people aren’t aware of is that, if you absolutely dislike the concept of having Private Mortgage Insurance (PMI) on your loan, you have the option of paying a percentage to buyout the monthly PMI.

Lender-paid mortgage insurance, or LPMI is available only on conventional loans. The idea of having lender paid mortgage insurance is relatively simple: pay a percentage up front when you get your loan and you will not be charged the traditional monthly PMI.

LPMI is also available on refinance transactions up to a loan-to-value ratio of 95%. Loan-To-Value, or LTV is based off your loan amount as a percentage of the homes estimated value. The monthly savings are dramatic and may be the difference needed for you to qualify for the home you want.

Just like tradition PMI, LPMI allows a borrower to put as little as 5% down on a new purchase and not the traditional down payment of 20%.

When it comes to the benefits of LPMI, most people think of the lower monthly payment, but an additional benefit to LPMI is that you may actually qualify for a higher purchase price. This is because your monthly payment is now lower having paid a percentage – determined by the mortgage insurance company – so you don’t have the traditional monthly PMI on your mortgage payment. When you do the math, it is possible that getting LPMI on your loan could save you a chunk of money on your monthly mortgage payment.

Is LPMI right for you? As always please contact an BOE Mortgage loan officer to discuss the conventional loan options as well as any other loan program options to see which program fits your specific loan the best.

Need more information? Give us a call at (724) 776-4100 or start an application today!

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