If your lender requires you to have mortgage insurance, you may have to weigh your options to determine which is best for your financial situation. Some lenders will offer to pay the mortgage insurance for you. This seems like a generous offer, but nothing in life or lending is free. If your lender pays for your mortgage insurance instead of you (Lender-Paid Mortgage Insurance), you’ll still pay the price in the form of a higher mortgage interest rate. Because the cost of insurance is spread over the life of the loan, however, your monthly mortgage payments won’t increase much. This can make affording your mortgage easier – your lender will allow you to make a smaller down payment without jacking up your monthly payment.

This sounds like a good deal, and for some borrowers, it is. The catch, however, is that you won’t have the option of canceling your mortgage insurance, no matter how much equity you have in your home. You’ll keep paying the higher interest rate until you satisfy the loan or refinance. This option works well for some and is great for those who need the mortgage interest deduction on their taxes.

Before applying for any loan, it is best to consult with a local San Diego home loans and refinance expert, like Olivia Guinn, that can help you determine the best financial option for you. To get started, contact Olivia today by calling 619.227.9173. You can also complete an application online to quickly find out which lending programs you may qualify for.