Does anyone know the typical LPMI rate adjustment for a jumbo-conforming ARM mortgage with 85% LTV and excellent FICO (around 800)? All information I could find on the internet was for the 30-year fixed mortgage, and I'm not even sure if LPMI should be higher/lower for ARM mortgage to make a guess... The logic tells me the rate adjustment should be higher for ARM, but I have no idea by how much.
LPMI for a jumbo-conforming ARM mortgage
- Thread starter sega
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Thank you for the information! The web site has a lot of rates, but nothing on LPMI for ARM loans (or maybe I just can't interpret the rates correctly)
I actually already have 85/15 mortgage. When I was getting it my lender offered it at a .125 rate increase comparing to the standard 80/20 (unfortunately 80/20 didn't work out because of the 1 year reserves requirement). At this point I just want to understand whether it was a typical rate increase due to borrowing 85% vs. 80% or small/high.
BTW, before deciding to go with the 85/15 I considered 80/5/15, but calculations showed it was a slightly worse option (but not by much: ~$3,000 total interest difference in 30 years and ~$1,000 by the time of the first rate adjustment). Plus single loan instead of two is easier to manage
However I didn't consider Single Premium PMI option - simply forgot about it. Is Single Premium PMI usually a better option than LPMI for ARM loans? My thinking is that for ARM loans the rate is going to adjust and you effectively pay LPMI premium only until the first rate adjustment. So Single Premium PMI has to be rather small to justify this option...
sgip
Well-known member
Couple of suggestions.
LPMI (lender paid MI) is really BPMI (borrower paid MI) because its built into the rate. You're paying for it, not the lender. It's cheaper in the long run to purchase a Single Premium PMI contract than to take the LPMI offers out there. Most, if not all lenders have LPMI 30 fixed, but rarely LPMI ARM programs. ARM programs don't always have big rebates to pay for the Single Premium expense, but it depends on the ARM program you're considering.
The best way to check on the cost of a Single Premium policy is to look up the cost on a PMI company website. I use www.radian.biz when exploring this option.
Curious why you'd want LPMI or Single Premium when some lenders can structure 80/5/15's. The second loans tend to be higher rate loans but not much more in the grand scheme of things. If it's a ratio, property type, or FICO issue, then I can understand why that won't work.
LPMI (lender paid MI) is really BPMI (borrower paid MI) because its built into the rate. You're paying for it, not the lender. It's cheaper in the long run to purchase a Single Premium PMI contract than to take the LPMI offers out there. Most, if not all lenders have LPMI 30 fixed, but rarely LPMI ARM programs. ARM programs don't always have big rebates to pay for the Single Premium expense, but it depends on the ARM program you're considering.
The best way to check on the cost of a Single Premium policy is to look up the cost on a PMI company website. I use www.radian.biz when exploring this option.
Curious why you'd want LPMI or Single Premium when some lenders can structure 80/5/15's. The second loans tend to be higher rate loans but not much more in the grand scheme of things. If it's a ratio, property type, or FICO issue, then I can understand why that won't work.
Soylent Green Is People said:
Thank you for the information! The web site has a lot of rates, but nothing on LPMI for ARM loans (or maybe I just can't interpret the rates correctly)
I actually already have 85/15 mortgage. When I was getting it my lender offered it at a .125 rate increase comparing to the standard 80/20 (unfortunately 80/20 didn't work out because of the 1 year reserves requirement). At this point I just want to understand whether it was a typical rate increase due to borrowing 85% vs. 80% or small/high.
BTW, before deciding to go with the 85/15 I considered 80/5/15, but calculations showed it was a slightly worse option (but not by much: ~$3,000 total interest difference in 30 years and ~$1,000 by the time of the first rate adjustment). Plus single loan instead of two is easier to manage
However I didn't consider Single Premium PMI option - simply forgot about it. Is Single Premium PMI usually a better option than LPMI for ARM loans? My thinking is that for ARM loans the rate is going to adjust and you effectively pay LPMI premium only until the first rate adjustment. So Single Premium PMI has to be rather small to justify this option...
sgip
Well-known member
It's pretty hard to describe every detail in a forum post as there are a million and one variables. Some quick notes:
1) Try to concentrate your comparisons over a 10 year period. The likelihood of keeping a mortgage for 30 years is very small. You could move, refinance, sell, or rapidly pay down your loan during the first 5-10 years.
2) When you go through Radian's check list, use Lenders/Calculators+Rate Finder, then use the check box BPMI Monthly - Borrower Paid PMI, the most commonly used PMI choice - and BPMI Single for the Single Premium option.
The remaining check boxes are pretty simple. You can guesstimate your debt to income ratios and the AUS data should be left alone. Once it calculates you'll see the cost difference. From there? You've got to ask your lender what the rebate will be on either an ARM or a Fixed loan.
Better yet - change lenders because you're not getting the kind of information you need. It's very helpful to bounce ideas off of third parties, something that I still encourage people to do. Posting does give perspective to potential buyers about similar questions. The number of lurkers here in the same boat as you are pretty high so you're helping the community through these questions. The problem here is that some of the answers you're looking for should have already been freely addressed by the lender at point of application.
3) .125 in rate for an 85% LTV loan with PMI is fairly typical. .125% in rate for an 85% LTV loan with the PMI built into that .125% in rate is a pretty sweet deal relatively speaking. If that .125% boost is with LPMI, take it.
1) Try to concentrate your comparisons over a 10 year period. The likelihood of keeping a mortgage for 30 years is very small. You could move, refinance, sell, or rapidly pay down your loan during the first 5-10 years.
2) When you go through Radian's check list, use Lenders/Calculators+Rate Finder, then use the check box BPMI Monthly - Borrower Paid PMI, the most commonly used PMI choice - and BPMI Single for the Single Premium option.
The remaining check boxes are pretty simple. You can guesstimate your debt to income ratios and the AUS data should be left alone. Once it calculates you'll see the cost difference. From there? You've got to ask your lender what the rebate will be on either an ARM or a Fixed loan.
Better yet - change lenders because you're not getting the kind of information you need. It's very helpful to bounce ideas off of third parties, something that I still encourage people to do. Posting does give perspective to potential buyers about similar questions. The number of lurkers here in the same boat as you are pretty high so you're helping the community through these questions. The problem here is that some of the answers you're looking for should have already been freely addressed by the lender at point of application.
3) .125 in rate for an 85% LTV loan with PMI is fairly typical. .125% in rate for an 85% LTV loan with the PMI built into that .125% in rate is a pretty sweet deal relatively speaking. If that .125% boost is with LPMI, take it.
I used MI Rate Finder as you suggested and it looks like single premium BPMI actually would have been
a bit worse option than 0.125 LPMI rate increase for my case with the difference of ~$2,000 over the first 10 years (and yes, LPMI in my case was built into .125 rate increase). I can sleep well now
Again, thank you for very informative answers and for educating me and hopefully others!
a bit worse option than 0.125 LPMI rate increase for my case with the difference of ~$2,000 over the first 10 years (and yes, LPMI in my case was built into .125 rate increase). I can sleep well now
Again, thank you for very informative answers and for educating me and hopefully others!