Everyone hate’s paying PMI, so why pay it?

Everyone hate’s paying PMI, so why pay it? The public’s belief is that the only way to eliminate monthly PMI on a conventional loan is by putting 20% down. Not true. A buyer can put a minimum of 5% down and NEVER pay monthly PMI.

• How does this work? Onetime PMI. A buyer can pay a onetime PMI fee in the form of a discount point that will eliminate monthly PMI. We know that PMI does not drop off until the loan is at 80% LTV, which means you will pay monthly PMI for over 9 years.

• Financially worth it? Yes! It only takes 3 years to recoup the onetime upfront fee. Sure beats paying over 9 years. The fee is also charged as a discount point which means 2 things, its tax deductible and sellers can pay it.

• How much is the fee? The onetime fee is derived from credit and loan amount, but to keep it simple, let’s assume the buyer has 740 FICO and putting 5% down on $200,000 purchase price, the fee would be $3,800.

This program can help buyer’s increase their price range by $25,000 in some cases without increasing
their monthly payment. That’s a bonus room or maybe a pool that’s now in their price range.

Example:

Monthly PMI Program

Purchase Price – $200,000

Down Payment – 5%

Interest Rate – 5%

P&I = $1,019

PMI = $123

$1,142

Onetime PMI program (lowest payment option)

Purchase Price – $225,000

Down Payment – 5%

Interest Rate – 5%

P&I = $1,147

PMI = $0

$1,147

Please feel free to call or email Taylor with any questions.

Taylor Ortiz

SpiritBank Mortgage Loan Officer

Office: 405-513-7805

Cell: 405-509-1064

tortiz@spiritbank.com

www.spiritbank.com/tortiz