If you are going to purchase a home in the Colorado Springs area and are going to obtain a loan without making a 20% down payment, mortgage insurance will be part of your monthly mortgage payment.
With the increased numbers of foreclosures, lenders are being very cautious when it comes to financing homes for buyers. For example, if a buyer decides to put down 5% on a home and finances the rest (95%), the private mortgage insurance is going to be higher than if they had put a 10% down payment on the home.
Lenders look at a buyer’s credit score in addition to the down payment amount when the mortgage insurance monthly payment amount is figured. A lower credit score and lower down payment amount will result in a higher mortgage insurance payment for the borrower. Good credit and little down will may also result in a higher mortgage insurance amount.
Higher mortgage insurance, protects the lender in a situation the borrower defaults on the loan payments. When shopping for a loan make sure and inquire about how much the monthly private mortgage insurance (PMI) amount will add to your monthly payment, you will be surprised how quickly your mortgage payment will change when PMI is added, especially, if you have less than
perfect credit. It can add hundreds of dollars per month to your mortgage payment!
Some institutions will have higher PMI than others depending on how many loan defaults they have had; the more defaults a specific lending institution has had will probably correlate with higher PMI when obtaining financing through the institution.