Mortgage insurance is a crucial component of the homebuying process, especially for those who are unable to make a substantial down payment. In this guide, we’ll delve into the ins and outs of mortgage insurance, focusing on how it works specifically in the Sacramento area.

What is Mortgage Insurance? Mortgage insurance is a financial safeguard for lenders in case borrowers default on their loans. It is typically required when the down payment is less than 20% of the home’s purchase price.

Types of Mortgage Insurance:

Private Mortgage Insurance (PMI): PMI is commonly used for conventional loans and is provided by private insurance companies.
FHA Mortgage Insurance Premium (MIP): MIP is mandatory for FHA loans and is paid both upfront and annually.

How Does Mortgage Insurance Work?

Protection for Lenders: Mortgage insurance protects lenders by reimbursing them if borrowers default on their loans. It enables lenders to offer loans with lower down payment requirements.
Cost to Borrowers: Borrowers typically pay for mortgage insurance either monthly, as part of their mortgage payment, or upfront at closing. The cost varies based on factors such as loan amount, down payment, and credit score.
Cancellation Options: Borrowers with conventional loans can request to cancel PMI once they have accumulated sufficient equity in their homes, typically reaching a 75%-80% loan-to-value ratio. For FHA loans, MIP is required for the life of the loan in most cases.

Benefits of Mortgage Insurance:

Access to Homeownership: Mortgage insurance allows borrowers to purchase homes with a smaller down payment, making homeownership more attainable.
Competitive Interest Rates: With mortgage insurance, lenders are more willing to offer loans with lower down payment requirements.
Flexibility: Mortgage insurance offers flexibility in financing options, catering to a diverse range of homebuyers.

Considerations for Sacramento Homebuyers:

Market Dynamics: Understanding the local real estate market and loan requirements specific to Sacramento is crucial for navigating mortgage insurance effectively.
Consultation: Working with an experienced mortgage lender like Dan Tharp can provide valuable insights into mortgage insurance options tailored to the Sacramento area.

In conclusion, mortgage insurance plays a pivotal role in facilitating homeownership by mitigating risk for lenders and providing opportunities for buyers with smaller down payments. By grasping how mortgage insurance works and its implications in the Sacramento market, prospective homebuyers can make informed decisions to achieve their homeownership goals.

For personalized guidance and expert assistance with your mortgage needs in the Sacramento area, feel free to reach out to Dan Tharp, your trusted mortgage lender.

The above information is for educational purposes only. All information, loan programs and interest rates are subject to change without notice. All loans subject to underwriter approval. Terms and conditions apply.

3-2-1 Home Plus Program If you’re a first-time homebuyer with a low-to-moderate income, 3-2-1 Home Plus provides down payment flexibility to get you into a home now. * You bring a 3% down payment * We give you a $2,000 eGift Card to The Home Depot^®* * Plus, $500 to $1,500 toward closing**
BONUS – An additional advantage is that you can keep your options open and consider homes with minor repair or improvement needs. With 3-2-1 Home Plus, the $2,000 eGift card to The Home Depot^® gives you peace of mind knowing you have extra resources to put toward minor repairs or improvements without tapping into your cash reserves.

The emotional security of owning your own home is immense! With home affordability coming down, buyers need all the help they can get. Now, you can add peace of mind with Guild’s 3-2-1 programs. Let’s Talk! Text, call, or email me for more details @ 916-257-1470 @ dtharp@guildmortgage.net

*For 3-2-1 Home Plus program full terms and conditions, visit 3-2-1 Home Plus Program | 3% Down Payment | Guild Mortgage

Payment Advantage is a Conventional loan for homebuyers wanting to save on their payments now as rates continue to rise. For eligible homebuyers, Payment Advantage will lower your payment for the first year by paying 1% of your interest rate for year one of your mortgage.
BONUS – Loans locked on or before 3.31.2023 can be paired with Guild’s Payment Protection Program to be able to refinance once rates drop in the future with no lender fees.

The emotional security of owning your own home immense! With home values coming down, and sellers more apt to provide incentives, now you can add peace of mind with Guild’s new programs. Let’s Talk! Text, call, or email me for more details @ 916-257-1470 @ dtharp@guildmortgage.net

*For Payment Protection Programs full terms and conditions, visit www.guildmortgage.com/homebuyer-protection

Rates are rising—let’s get your listing sold now! Our LockNow and Sell program takes the uncertainty out of homebuying.

Guild Mortgage’s LockNow and Sell program guarantees the interest rate for your listing even if rates continue to rise.

By the seller locking in a rate,^* buyers can feel sure about their purchase—there’s no need to wait for rates to drop as their rate will not increase at the time of purchase. And if rates go down, the homebuyer can utilize a float-down option.

Here are the details:

Secure today’s rate on your seller’s property for 60 days*

Conventional, FHA, VA, or USDA financing is available, so the homebuyer can choose the financing that’s right for them**

The seller must commit to providing a 2% seller incentive to buydown the homebuyer’s interest rate

*$1,500 non-refundable upfront lock-in fee applies to secure the interest rate for the future of the homebuyer for 60 days. **Additional loan level price adjustments may apply based on credit score, occupancy, loan term, loan-to-value, or guideline requirements. A seller incentive of 2% of the final sales price is required to pay for the buydown costs or closing costs, whichever the homebuyer selects. For use by Real Estate Professionals only. Not intended for public use or distribution.

You get exclusive access to this program now. Text, call, or email me for more details @ 916-257-1470 @ dtharp@guildmortgage.net

Sell your listing FASTER and stand out from the crowd by offering a locked rate with your listing!

Download Flyer Here!

The above information is for educational purposes only. All information, loan programs, and interest rates are subject to change without notice. All loans are subject to underwriter approval. Terms and conditions apply. Always consult an accountant or tax advisor for full eligibility requirements on tax deductions. Consult the LockNow and Sell Program Guidelines for eligibility information and LockNow and Sell Agreement for full program terms. Subject to change without notice. A seller incentive of 2% of the final sales price is required to pay for the buydown costs or closing costs, whichever the homebuyer selects. For J.D. Power 2021 award information, visit jdpower.com/awards.

Inflation has been the word du jour of late, and we all feel it. My ah-ha moment was when I filled up my tank a few weeks ago at my favorite gas station, and gas was $6 a gallon! We are not alone in this pain, as folks are feeling this worldwide. According to an energy data tracking company, gas prices in the U.S. ranked 70th among the 170 counties tracked. For our friends in Germany, gas is pushing $9, while in Hong Kong, it’s over $11!

Having been a mortgage professional in Sacramento for two decades, I get asked a lot, “Is this the right time to buy?” and second most popular question, “What’s your rate?”. These are excellent questions, as I, too, seem to always focus on the financial benefits of homeownership. Thankfully, my new homebuyers remind me daily that owning a home is not a purely financial investment but a life-changing event. It provides stability for your family in a neighborhood you love and creates lasting memories as you turn that house into your home.

I am strongly inclined that you are reading this blog because you have been considering buying a new home. And I suspect the current economy might be putting a damper on those dreams. Are you basing this mood on emotion and fear? Have you considered the actual benefits of owning your piece of the pie? With home prices way up and inflation increasing the cost of life’s basic expenses, is now the right time to dive into your first mortgage? And if you wait, could you be priced out of the market altogether? You might not be entirely surprised by my answer. If you are ready for a long-term commitment and can comfortably afford the monthly mortgage payment and ongoing homeownership costs, then YES, YES, YES. It may be your perfect time to buy.

Let me hit you with some financial data regarding inflation and buying versus renting. According to a Stanford University study (January 2020), residential real estate has historically been an “investment safe-haven” during inflationary periods. In addition, during another moment of surging inflation (the 1970s), home prices rose relative to the size of the economy. Great news for homeowners since it meant their home’s increasing value helped offset rising costs elsewhere.

For my renters who have been stalking the market but are now not sure they want to buy, I always ask, “Is your rent going down?” According to CNN Business, rents in Sacramento jumped 19.5% from 2020 to 2021. For those wanting to make the leap to owning a home, “rising rents will remain a motivating factor even as for-sale home prices and mortgage rates continue to climb,” said Danielle Hale, Realtor.com’s chief economist.

With home prices seeing such a jump over the previous few years, I have to drive the point with my new buyers that few of us are lucky enough to find our dream home the first time. So, think about compromising to find that sweet, happy medium instead of trying to get everything you want. The power of homeownership starts with your first purchase, and buyers have to start somewhere so they can eventually get to where they want to go. So, reach out to your favorite realtor to find that balance between home size, neighborhood, price, and all the bells and whistles.

Is Buying a Home a Hedge Against Inflation?

Homeownership, for many, is the ultimate American dream. Of course, people may not want to own a home for many reasons, but there’s no denying that being a homeowner can hugely impact your net worth. According to a CNBC.com article (Sept 2020), in 2019, homeowners in the U.S. had a median net worth of $255,000, while renters had a net worth of just $6,300. Let that soak in for a minute.

However, don’t think this answers all your financial needs. Buying a home is a big deal and not something to take lightly. Take your time to review the financials with your realtor, your mortgage person, and possibly a financial planner. Owning a home is a big responsibility to pay for and maintain. If you don’t feel you can stay rooted in that home for at least a few years, then renting might be the best route.

The above information is for educational purposes only. All data, loan programs, and interest rates are subject to change without notice. All loans are subject to underwriter approval. Terms and conditions apply. Always consult an accountant or tax advisor for complete eligibility requirements on tax deduction.

Dan the Mortgage Planner

Removes the curtain of secrecy on the mortgage world.

WHAT IS MORTGAGE INSURANCE? A Comprehensive Guide

A GIFT to Homebuyers! Get Closer to Home with Guild’s 3-2-1 Home Plus Program!

A GIFT to Homebuyers! Guild’s Payment Advantage program lowers the buyer’s rate by 1% for their first year on us!

NEW!!! Help your Sellers sell their home FASTER by locking in the rate for your potential buyer.

With Inflation Rising, Is This The Right Time To Buy a Home?

Is Buying a Home a Hedge Against Inflation?

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Is Buying a Home a Hedge Against Inflation?

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