EL SEGUNDO HERALD December 5, 2019 Page 9
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Mortgage Insurance: A Faster Way Into Your First Home
Lynn O♥Neil Real Estate
(310) 261-0798
Assoc Broker 31 years/Manager
TOP PRODUCER BEACH CITY BROKERS
804 California St
Offered At: $1,499,000
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Built in 1958 and Remodeled
~Large Living Area, Fireplace, Opens To Sunny Yard,
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~Hdwd. Floors, Newer Roof, Dual Pane Windows,
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(BPT) - For many Americans, the biggest
hurdle in buying a home is the down payment.
According to a recent report,
49% of non-homeowners stated
that not having enough money
for a down payment and closing
costs was a major obstacle to
purchasing a home. Many people
also mistakenly believe lenders
require a 20% down payment to
qualify for mortgage financing.
Data shows that by using
private mortgage insurance (MI),
millions of homebuyers with
down payments as low as 3%
or 5% have been approved for
affordable and well-underwritten
mortgages.
In the past year alone, MI has
helped more than 1.1 million
borrowers purchase or refinance
a mortgage. Nearly 60% were
first-time homebuyers, and more
than 40% had annual incomes
below $75,000.
How MI works
In addition to the other elements of the
mortgage underwriting process - such as
verifying employment and determining the
borrower’s ability to afford the monthly
payment - lenders require borrowers to commit
some of their own money before approving
their mortgage loan. This is where MI entered
the system more than 60 years ago, to bridge
the down payment gap and help creditworthy
borrowers qualify for a mortgage without
large down payments.
Benefits of MI
* It helps you buy a home sooner. On
average it could take 20 years for a household
earning the national median income of
$61,372 to save 20%, plus closing costs, for
a $262,250 home, the median sales price for
a single-family home. MI helps borrowers
qualify with as little as 3% down.
* It is temporary, leading to lower monthly
payments down the road. MI can be cancelled
once 20% equity is established,
either through payments or home
price appreciation. Borrowers
typically can cancel MI within the
first five to seven years. This is not
the case for the vast majority of
mortgages insured by the Federal
Housing Administration. FHA
mortgage insurance premiums stay
on the loan for the life of the loan.
* It provides several flexible
payment options. Your lender can
offer several MI product options
for MI payment; the most common
is paid monthly along with your
mortgage until the MI cancels.
MI is a stable, cost-effective way
to obtain a low down payment
mortgage, and offers distinct
benefits to borrowers. It’s been a
cornerstone of the U.S. housing
market since 1957, providing
more than 30 million families
with the opportunity to own
homes despite financial barriers. If you are
considering purchasing a home, it is important
to understand your options, including your
low down payment options. To learn more,
visit LowDownPaymentFacts.org. *
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