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 pringle
Joined: 11 Jul 2007
Posts: 1
1.36 Dollars($)
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 Posted: Wed Jul 11, 2007 2:46 pm Post subject: Will I have to pay for mortgage insurance? |
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| Will I be able to finance the mortgage insurance as part of the loan or will I have to come up with cash each year? Am I in fact required to have mortgage insurance at all? I've gotten an estimate for a reverse mortgage which includes the first year's mortgage insurance premium of $3300 as part of the closing costs. This comes to almost $300 a month. Having to put out this much cash every month would considerably lessen any gain I'd make by getting the reverse mortgage in the first place. |
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miller_st
Joined: 17 Jan 2007
Posts: 917
168.82 Dollars($)
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| Posted: Wed Jul 11, 2007 3:43 pm Post subject: |
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Mortgage insurance is important for lender as it guarantees that he will receive his full payment if in case there is decrease in property's value. MI also covers him in the event mortgage is held for a long time & accrued interest exceeds home value.
Home Equity Conversion Mortgage (HECM) program requires a MIP of 2% of the principal limit amount as an up front payment & annual premiums of 1/2% per year on the outstanding mortgage loan balance.
This insurance is important as it is assures of continually receiving your benefit no matter what happens to the value of your home and you also get better terms than what are available without FHA guarantee. The better terms equal the expenditure you have to make on the MI. The rate on the insured mortgage is substantially lower than what is available for loans with the mortgage insurance.
Miller |
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Rove r32
Guest
0.10 Dollars($)
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| Posted: Wed Jul 11, 2007 7:04 pm Post subject: |
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Is it a conventional reverse mortgage or hud/fha insured reverse mortgage? If it is the latter then the advantage you get is that the rate on it is comparatively lower than what is available on non insured reverse mortgages.
So you need to compare the expenses on MI with the savings you'd be making with lower interest rate on the mortgage. |
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helping_user
Joined: 31 Mar 2006
Posts: 727
Location: Hawaii
135.62 Dollars($)
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| Posted: Thu Jul 12, 2007 5:37 am Post subject: RE: mortgage insurance financed with reverse loan |
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Pringle,
If it's a reverse mortgage other than the Home Equity Conversion Mortgage (HECM), I don't think you can finance the insurance along with the loan. Your payments towards the reverse mortgage should include the monthly installments towards property taxes as well as insurance premiums.
However, if you go for an HECM, the mortgage insurance premiums (MIP) can be financed with the loan. This insurance policy makes sure that you will get your monthly loan advances and there's no need to repay the loan as long as you stay in the property. You will have to pay for this insurance in two parts:
- The lesser of 2% of your home value or 2% of the 203-b loan limit in your area which you need paying at the time of closing.
- And, 0.5% is added to the interest rate charged on your increasing loan balance.
The best thing about the MIP is, it ensures that your total debt will never exceed the home value.
Hope I could help you.
Thanks |
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