MI Basics
The best plan for your borrower
MGIC has a variety of rate programs to choose from. When you're choosing the best plan for your borrowers, take these factors into consideration:
- the length of time the borrower plans on owning the home
- the rate of home price appreciation in the property's neighborhood
- the type of mortgage instrument
- the size of the down payment
- How long does the borrower plan on owning the home?
- For borrowers who don't plan on owning a home for a long period of time, consider One-Time MI. If the loan is paid off or mortgage insurance is cancelled within the first five years, the borrower receives a premium refund.
If a borrower anticipates owning a home for more than five years, consider MGIC's ZOMP! monthly premiums or SingleFile lender-paid mortgage insurance.
top - At what rate is the home’s neighborhood appreciating?
- Home appreciation rate is a factor in the MI cancellation equation. Private MI cancellation criteria are established by mortgage lenders or investors, and generally MI is not cancellable for the first two years.
If the neighborhood is appreciating at a rapid rate, borrowers would be eligible to cancel MI any time after two years if they have good payment history, and 75% loan-to-value. Borrowers with good payment history are eligible to cancel their MI with 80% loan-to-value after five years. You may want to consider cancellable, refundable premium plans for borrowers who anticipate achieving 75% loan-to-value after two years.
top - What type of mortgage instrument is the borrower interested in?
- Mortgage insurance premium calculations involve many factors, including the percentage of coverage, premium plan selected and loan type.
MGIC charges higher premiums to insure loans with higher LTV ratios, negative amortization, adjustable payments or A- Expanded Criteria loans because the risk of default is greater. Some of these factors may raise the cost of the mortgage to your borrower.
top - How much of a down payment is your borrower making?
- Private MI was designed to help those who want to buy a home get over the down payment hurdle and buy sooner. With the help of private MI, borrowers have the option to put less money down and use any left over for investments, home-related purchases or repairs. Below are MGIC's more popular premium plan options.
MGIC’s ZOMP! (Zero Option Monthly Premium) is perfect for borrowers who may have difficulty accumulating cash for closing, but are otherwise qualified to buy a home. With this plan, borrowers experience no increase in the loan amount and need no cash at closing. MI coverage is automatically cancelled at 78% LTV by amortization.
MGIC’s One-Time MI premium plan gives borrowers the option of financing the MI premium. Borrowers benefit with a low monthly payment, tax-deductible interest paid on the financed premium and a possible premium refund at the time of pay off.
With MGIC’s SingleFile lender-paid MI, borrowers pay no MI premium. To cover the cost of the premium, the lender may slightly increase loan fees or the interest rate or include the cost of a single-premium MI policy in the amount financed. Generally, the interest paid by the borrower is tax-deductible.
Premium Plan Comparison chart - Use this side-by-side comparison to help determine the best plan for your borrower.
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