Cheryl Knowlton: Hi, everybody. Cheryl Knowlton, Dynamite Productions, coming at you with Clay Johnson-
Clay Johnson: Hi.
Cheryl Knowlton: … from Castle & Cooke Mortgage here for episode three of What in the World is Mortgage Insurance? So, Clay, there are different ways that mortgage insurance on the conventional side can be structured.
Clay Johnson: Yes. So we talked last time about when we were talking the difference between FHA and conventional, how you are going to have that monthly, which would be affected by your credit score and your down payment. However, they’ve done some changes in the last several years on the conventional mortgage insurance side of things. So instead of just having that monthly mortgage insurance, you can say, “Hey, if I had just a one-time premium upfront, how much would that be?”
Clay Johnson: Now this can make a lot of sense in some cases where you’re putting down more than 5% or 10% down, and you have a good credit score. That can be way more affordable, and your break-even point is generally going to be in the two-and-a-half to the three-year range if you’re looking at that, and so it can be a really good thing.
Clay Johnson: The other thing is sometimes they can’t come up with that whole premium just get rid of it completely, but there’s a little bit of money left over in the transaction. I love the split premium option, because sometimes there’s a little bit of seller paid closing costs leftover or something, and you can apply that towards a split premium, which essentially says, “We have this much upfront,” and now your monthly instead of being this level is going to be this level. It creates that payment scenario that the buyer’s a lot more comfortable with sometimes by dropping their monthly mortgage payments. So monthly, super single with light MI.
Cheryl Knowlton: As opposed to light mayo.
Clay Johnson: So it’s the single or the split premium. So yeah, a couple of different options there. Call us with any questions you have because we really do like making sure it’s the best payment and scenario for you based on your circumstances.
Cheryl Knowlton: Absolutely, and getting the right mortgage is so, so important because… That’s why I got into mortgage lending, to begin with. That’s a story for another day. Thank you for being with us for this episode. We’ll see you at the next one.
Clay Johnson: Bye-bye.