What is LPMI?
LPMI is lender paid mortgage insurance and is available only on conventional loans. It allows you to pay an upfront fee or take a higher interest rate instead of having monthly mortgage insurance. It can be a dramatic savings on your monthly payment. LPMI used to be a much more popular product a few years ago but as options have been limited these products are tough to find.

The good news is Academy Mortgage still has this LPMI product!

We will take a look at an example. Here is a conventional loan with the following assumptions:

• $200,000 purchase price
• 10% down payment
• 750 credit score
• 30 Year fixed rate 4.875%

Option 1 – with standard monthly MI:

• $971 Principal & Interest
• $84 Monthly mortgage insurance
• =$1055 Total

Option 2 – upfront premium paid by borrower or seller is $3574

• $971 Principal & Interest
• = $84 monthly savings
• = $9504 10 year savings

Option 3 – Borrower takes a higher rate of .375% or 5.25% in exchange for no monthly MI

• $1013 Principal & Interest
• =$42 monthly savings

Another great benefit to this loan is that you can actually qualify for more money since your monthly payment is less.

I recently had a loan where they borrower could not qualify for the home they wanted because Fannie Mae and mortgage insurance companies have made the debt to income ratios so conservative. In this specific case the borrowers were just 1% over the allowed debt to income ratio.

We were able to provide upfront mortgage insurance which was paid for by the seller and reduce the borrower’s payment enough that it was acceptable to Fannie Mae and the mortgage insurer.

The monthly savings are dramatic and may be the difference of you qualifying for the home you want.

Consult a Chapter 13 Lawyer if it is the right option for you.

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