Mortgage Insurance Rates

In order to secure themselves against potential default of mortgages, mortgage sellers adopt the policy of buying insurance policies. These insurance policies are mandatory for those mortgages in which there has been a down payment of less than 20%. The premiums over these mortgage insurance are generally passed on to the buyer of the mortgage, who pays it along with the monthly payments towards the mortgage. Such mortgages are also called BPMI, or Borrower Paid Mortgage Insurance. There is also another kind of mortgage insurance – the LPMI, or Lender Paid Mortgage Insurance. The conventional pattern is to go in for a BPMI.

Rates of mortgage insurance vary according to current situations. As in mortgages, the rates of the insurance also may be either fixed or adjustable. Fixed-rate mortgage insurance is constant for the entire life of the mortgage, while adjustable-rate mortgage insurance varies according to market fluctuations in rates.

Mortgage insurance rates also differ depending on whether they are BPMI or LPMI. There is not much difference in the numbers; the difference lies in who pays the premiums of the mortgage. In addition to all these factors, mortgage insurance rates also depend on the amount of mortgage coverage that the insurance provides. A greater coverage would be levied at a lower rate of insurance.

It is not easy to mention the rates individually, as there are a wide number of factors and statistics involved and they vary from day to day. However, any mortgage insurance company would be more than pleased to give a current list of the insurance rates if asked. It is highly necessary to know the current mortgage insurance rates while buying a mortgage, as typically it would be the borrower who would have to pay for it. Most borrowers neglect to ask the mortgage rates from their mortgage sellers, or they are simply misinformed. These are the people who later find themselves stuck in a rut of high monthly payments.

Mortgage Loan Term Length: 15 or 30 Years?

The term length you choose for your mortgage depends on your current financial situation and your long term financial goals. Here is what you need to know when choosing a mortgage term length.

The term length of your mortgage, along with the interest rate, determines how much your monthly payment will be. Term length is the amount of time the mortgage lender gives you to repay the loan. Common choices for mortgage term lengths are 15 and 30 years; however, there are mortgages available with term lengths of 5, 10, and even 40 years.

Which term length is right for you? It depends on your financial objectives. Do you need a mortgage with the lowest possible monthly payment? Do you want to build equity and payoff the mortgage as soon as possible? If you are looking for the smallest monthly mortgage payment possible, choose a mortgage with the longest term length. If you want to build equity and pay off the mortgage as quickly as possible, choose a mortgage with a short term length. Mortgages with a 15 year term are a popular choice with homeowners refinancing their mortgages for this reason.

The interest rate you receive on your mortgage loan is influenced by the term length you choose. Mortgage loans with long term lengths represent more risk to the lender, for this reason your interest rate will be higher with a long term mortgage loan. The opposite is true of mortgages with short term lengths, there is less risk for the mortgage lender and these mortgages come with lower interest rates.