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Friday, February 4, 2011

Ken Rainey to the Rescue- New Loan Program Offsets Mortgage Insurance Premium

It's a bird, it's a plane, blah,blah, blah.. it's Ken Rainey from Sharpe Mortgage to the rescue on a recent transaction for one of my clients.

These days there is misinformation floating around that you can no longer buy a house with less than 20% down.  That is SO false.  Today, as in the "golden age" of real estate (that's what I'm now calling the years 2000-2006), you can still buy a house for as little as 5% down- maybe even less than that in some cases.  You do have to have good credit (meaning really good credit).  Typically, when you put down less than 20% as downpayment, you have to buy pesky Mortgage Insurance Premium (MIP).  This is basically an insurance premium your lender requires to cover their ass, I mean back, if you were to default on the loan.  They figure if you put 20% of your own money down, you are less likely to walk away from paying your housepayment as you would lose a lot of your own hard earned money.  Anyway, this insurance is pricey and makes your payment higher.  So many times, a buyer would put 10% down as downpayment and take out a 2nd mortgage for the remaining 10% so they could avoid paying expensive MIP. The problem here, though, is that the 2nd mortgage rate is a good bit higher than a 1st mortgage rate.  Still, paying a house payment of a combined 1st and 2nd mortgage is cheaper than paying MIP. 

Ken Rainey from Sharpe Mortgage has educated me and my client about a new program that allows the buyer to put as little as 5% down and not have to pay the expensive monthly MIP.  The MIP is paid upfront in a lump sum.  My client bought a house for  $363,000 with 5% down.  He is able to pay 1.95% of the loan amount up front and avoid the MIP which is saving him $270 per month.  And the coolest thing of all, is that we were able to negotiate the Seller to pay enough closing costs on behalf of my client, that there was enough money to cover my client's closing costs plus the upfront MIP.  My client is happy.  I am happy.

For more information about this and other loan programs, contact Ken Rainey from Sharpe Mortgage at 678-358-4602 or ken@sharpemtg.com .  By the way, Ken does not wear a Captain America suit (usually).

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