What Is Mortgage Insurance?

Mortgage insurance shields lenders if a borrower defaults on a mortgage. In Texas, it is used for conventional loans with down payments of less than 20%, FHA loans, and a few other types of financing. Although it works in favor of lenders, it also assists homebuyers in qualifying for homeownership with less initial investment. LBC Mortgage makes it easy for clients to meet these needs.

Types of Mortgage Insurance in Texas

Private Mortgage Insurance (PMI)

PMI is charged on conventional loans if the down payment is less than 20%. Premiums vary depending on credit score, loan size, and lender terms. LBC Mortgage helps lenders get best PMI rates and how to remove.

FHA Mortgage Insurance Premium (MIP)

FHA loans have an upfront and annual mortgage insurance premium. The upfront MIP is 1.75% of the loan amount, but the annual premium is 0.45% to 1.05%. Unlike PMI, MIP may last an entire lifetime of a mortgage unless the loan is refinanced into a conventional loan. Refinancing to reduce the payments of these products is offered through LBC Mortgage to clients.

VA and USDA Loan Mortgage Insurance

VA loans are not guaranteed by mortgage insurance but carry a funding fee. USDA loans carry an upfront guarantee charge and an annual charge similar to mortgage insurance. LBC Mortgage helps clients shop these items to identify the best loan program.

Mortgage Insurance Charges in Texas

There are several aspects that influence mortgage insurance charges. The loan type, credit score, down payment, and lender policies all play a role.

PMI Fees

PMI charges are 0.2% to 2% of the loan balance per year. Lower credit scores and smaller down payments increase costs. LBC Mortgage negotiates with lenders to secure the best available PMI rates for our customers.

FHA MIP Fees

For FHA loans, the upfront MIP is 1.75%, and annual premiums vary based on loan terms. Borrowers with shorter loan terms and higher down payments pay lesser MIP rates. LBC Mortgage walks clients through FHA requirements to save costs.

VA and USDA Fees

VA funding fees cost between 1.25% and 3.3% based on down payment and service status. There is a 1% up-front fee plus a 0.35% annual fee required for USDA loans. LBC Mortgage assists homebuyers who are veterans as well as homebuyers from rural areas to understand these costs and secure the most affordable funding.

Mortgage Insurance Requirement in Texas

Lenders consider loan type as well as risk factors when calculating mortgage insurance requirement.

Conventional Loan PMI Rules

Conventional loans with less than 20% down require PMI. However, borrowers can request cancellation when their loan balance reaches 80% of the home’s value. LBC Mortgage assists clients in understanding when and how to remove PMI.

FHA Loan MIP Rules

FHA loans mandate mortgage insurance for a minimum of 11 years with a down payment of 10%. In case the down payment is less, MIP is paid throughout the duration of the loan. LBC Mortgage assists lenders in considering the refinancing alternative to avoid paying long-term MIP.

VA and USDA Loan Insurance Regulations

VA loans come without mortgage insurance but include a funding fee. USDA loans include recurring fees but offer rates that compare favorably with other types of mortgage insurance. LBC Mortgage assists clients in taking full advantage of these loan benefits.

How to Save on Mortgage Insurance in Texas

Raise Your Down Payment

A larger down payment will either eliminate or reduce mortgage insurance. Conventional buyers avoid PMI with 20% down, and bigger down payments lower VA and USDA fees. LBC Mortgage coaches clients on how to use down payment strategies to save money.

Improve Your Credit Score

A high credit score will bring low PMI premium. A consumer can improve the score by making payments on time, paying down the debt, and not opening new lines of credit. LBC Mortgage guides clients in understanding how credit influences mortgage cost and provides suggestions to improve it.

Refinance to Eliminate Mortgage Insurance

Refinancing into a traditional loan eliminates FHA MIP and can eliminate PMI when home equity is 20%. LBC Mortgage helps clients consider refinancing to reduce overall costs.

Compare the Best Loan Offers

Varying lenders provide different mortgage insurance rates. LBC Mortgage shops around several lenders to find the best mortgage terms for our clients. Our experience guarantees borrowers receive the cheapest loan.

Why Select LBC Mortgage for Your Home Loan?

LBC Mortgage excels at assisting Texas homebuyers in meeting mortgage insurance needs while obtaining the best financing. Our professionals provide expert advice, customized loan products, and competitive rates. We shop multiple lenders to obtain the lowest PMI, MIP, and funding charges for our customers.

Homeownership is within reach with the right mortgage strategy. Contact LBC Mortgage today to explore your options and save on mortgage insurance.