MI Solutions for first-time homebuyers
Empower potential borrowers with options
Historically, the 20% down payment has been a big hurdle for many first-time homebuyers. MI is a tool you can use to help more renters become homeowners.
By allowing them to put less than 20% down on a home, private MI can help first-time homebuyers:
- Buy sooner: Borrowers can put down as little as 3%, reducing their time spent saving for a down payment.
- Expand house-hunting possibilities: Private MI allows borrowers to consider a wider range of home prices and available homes for sale – assuming, of course, that they can afford the higher monthly payment that accompanies the larger home price.
- Explore mortgage options that fit their goals: Private MI or FHA? Make sure to compare all the options!
MI helps first-time homebuyers buy sooner and build more equity
College grad Isaiah has some money saved up, but he doesn’t know much about the homebuying process. He’s not sure if he’d be better off buying a house or continuing to rent while he saves up for a larger down payment.
How MGIC MI compares with FHA
FHA loans and conventional loans with private mortgage insurance are both great options for borrowers who have less than 20% to put down on a home. It’s important to show your borrowers all the options for their individual situation so they can make an informed decision.
MGIC MI was right for first-time homebuyers Sarah and Val because it allowed them to put down less with a smaller monthly payment and gave them the ability to cancel MI in several years.
MI can be combined with gifts to further boost affordability
Andie is grateful to her parents for offering her a cash gift to help her buy her first home. But how should she use the gift most strategically? Should she add it to her own funds to increase her down payment amount, either on an FHA loan or a conventional loan with PMI? Or should she apply it to an MGIC single premium?
Running all the scenarios can give Andie options that lower her monthly payment or help her build more equity.
See how MI and a cash gift helped Andie afford a mortgage payment ►
MI is usually a temporary expense
Private MI can often be cancelled when the loan either reaches the cancellation point due to amortization of the original loan amount, or the borrowers request cancellation based on an increase in their home value due to appreciation or home improvements. For many borrowers, that may be an advantage over an FHA loan. FHA typically doesn’t allow borrowers to cancel the monthly MI payment unless they put down 10% or more.
MI cancellation gives you an additional opportunity to stay connected to your borrowers. They’ll thank you when you get in touch to notify them they may be able to cancel! Get more details on MI cancellation.
More MI Solutions tools and strategies
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Use MI to bolster your real estate relationships
Share creative MI Solutions with your real estate agent referral partners so that they can save deals, show more homes and offer homebuyers more options.
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Buy Now vs. Wait Calculator
Should first-time homebuyers wait a few more years to save up for a big down payment? Or is it smarter to buy right now?
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The truth about mortgage insurance
Demystify MI for your borrowers by sharing this handy info sheet that explains the benefits.