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Featuring Wes Dumalski, BCU Mortgage Business Consulting & Learning Manager (0:30), on private mortgage insurance versus mortgage insurance premium, and their connection to FHA loans, Erman Ramos, BCU Retail Mortgage Sales Regional Manager (9:24), on the homebuying market in 2025, opportunities to purchase a home without 20 percent down, and whether more homes are covered through PMI or MIP, and Ashley Seaver, BCU Mortgage Trainer (16:22), on first-time homebuyers today, the power of refinancing, and building generational wealth.
PMI aka Private Mortgage Insurance, “... is an insurance policy that covers a lender when someone’s taking out a mortgage and they’re not putting 20 percent down,” explains Wes. It’s not the insurance for the stuff in your house; That's home mortgage insurance, which is different than private mortgage insurance. PMI was invented to help insure the lender so they could take the risk necessary, meaning lend someone money to buy a home, without a down payment of 20 percent or more.
PMI takes out the cost of time associated with saving to buy a home and is tied to conventional loans. In contrast, mortgage insurance premium (MIP) is a type of mortgage insurance that is required of homeowners who take out loans backed by the Federal Housing Administration (FHA).1
“From a predicted six to eight rate cuts the first half of the year, we had none,” says Erman. He continues, “We’ll never get back to the rates from COVID ... that’s an anomaly”. Don’t wait for rates to go back down to two percent. Marry the home and date the rate, instead: Meaning if you find a house you love and can afford, go ahead and buy it.
“If you’re a first-time homebuyer today, let me just say, my heart goes out you, “Ashley shares. With tighter inventory and higher home prices, and student loan debt to take into consideration, homebuyers are being forced to get creative when it comes to building the financial foundation of their future. “Refinancing can be the difference between struggling and thriving financially,” she continues, “you’re getting a whole new loan to reset your mortgage situation.”
At the end of the day, “the only time to buy a home is when it’s right for you.” Don’t assume you know it all when it comes to homebuying and affordability. Talk to a professional, no matter your situation. Meet with a Certified Financial Coach.
1https://www.investopedia.com/mortgage/insurance/qualified-insurance-premium/
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