1 benefits of mortgage insurance presented by: mgic, suzanne lacaria, senior account manager essent,...
TRANSCRIPT
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!
Loan Amount $360,000
Upfront FHA Premium (Financed) $6,300
Total Loan Amount with upfront premium $366,300
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 Monthly
Sale Price $168,632 $183,158
Base 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
MI Payment Comparisons
Sale Price
Total Monthly Payment
~ $14,500 More home for the same monthly payment!
BPMI Monthly vs. FHA on an 95% LTV
14
MI Payment Comparisons
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
Total Loan Amount with upfront premium $291,128
Monthly MI Renewal Rate n/a
Monthly MI Premium n/a
P&I Payment $1,369
P&I + MI $1,369
What you get with FHA
MONTHLY SAVINGS of $259!
Base Loan Amount $285,000
Upfront FHA Premium (Financed) $4,988
Total Loan Amount with upfront premium $289,988
Monthly FHA Renewal Rate
1.20%
Monthly FHA MIP Premium $285
P&I Payment $1,343
P&I + MIP $1,628
Assumes: 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
What you get with FHA
MI Payment Comparisons
What you get with Borrower Paid Single
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 RatePer MI
Company
Gross Loan Amount (97.15% CLTV) $297,767
P&I Payment @ 3.875% $ 1,400
Monthly MI Premium $0
P&I + MI $1,400
Sale Price $258,000
Base Loan Amount at 95% LTV $245,100
Upfront FHA Premium (Financed) $4,289
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
What you get with FHA
MI Payment Comparisons
What you get with Borrower Paid Single
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
Base Loan Amount at 95% LTV $297,700
Upfront MI Rate (Paid in Cash)Per MI
Company
Gross Loan Amount $297,700
P&I Payment @ 3.875% $1,400
Monthly MI Premium $0
P&I Payment $1,400
Sale Price $258,000
Base Loan Amount at 95% LTV $245,100
Upfront FHA Premium (Financed) $4,289
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
MI Payment Comparisons
What you get with FHA
Lender Paid MI Premium Rate4.25% Note Rate
1.75% Upfront Premium Rate3.75% Note Rate
Loan Amount $360,000
Financed Upfront Premium Amount $0
Total Loan Amount $360,000
Monthly MI Renewal Rate n/a
Monthly MI Premium $0
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!
Loan Amount $360,000
Upfront FHA Premium (Financed) $6,300
Total Loan Amount with Upfront premium $366,300
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
18
MI Payment Comparisons
LPMI Premium Rate4.25% Note Rate
1.75% Upfront Premium Rate3.75% Note Rate
Loan Amount $237,500
Financed Upfront Premium Amount $0
Total Loan Amount $237,500
Monthly MI Renewal Rate n/a
Monthly MI Premium $0
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!
Loan Amount $237,500
Upfront FHA Premium (Financed) $4,156
Total Loan Amount with Upfront premium $241,656
Monthly FHA Renewal Rate 1.20%
Monthly FHA MIP Premium $238
P&I Payment $1,119
LPMI Singles vs. FHA on a 95% LTV, with a .75% increase
Reflects FHA Rates Effective April , 2012
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