CAN MEAN A LOWER COST

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FOR MOST HOME BUYERS, A CONVENTIONAL LOAN

REALTOR

®

_Presentation

Right for You, Right for the Buyer

CAN MEAN A LOWER COST

Carolyn Delaney| Senior Account Executive

Cell: 571-212-1411

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WHAT IS MORTGAGE INSURANCE?

• Benefits for home buyers:

• Lower down payment—as low as 5% or even 3%—allowed.

• Can buy a home sooner; saving the cash for a traditional 20% down

payment remains a significant barrier to home ownership.

• Can buy more home for the same amount of cash at closing.

If a homeowner defaults on a loan and the loan goes to foreclosure, a

mortgage insurer (United Guaranty) covers a portion of the expenses and

outstanding loan balance that the lender cannot recover.

Home Purchase Price 20% Down Payment (no MI) 10% Down Payment (with MI) 5% Down Payment (with MI) 3% Down Payment (with MI) $200,000 $40,000 $20,000 $10,000 $6,000 $300,000 $60,000 $30,000 $15,000 $9,000 $400,000 $80,000 $40,000 $20,000 $12,000

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OPTIONS FOR PAYING THE MI PREMIUM

Monthly Premium Payment Options

• PostPay®_._{This is our most popular option. The first premium payment isn’t due until the first mortgage}

payment is due.

• Non-PostPay. Premiums are due monthly from the borrower.

• Borrower- or lender-paid. Monthly premium payments can be passed on to the borrower or can be paid

by the lender (with the MI cost reflected in a higher mortgage interest rate).

Single Premium Option

• A lump-sum MI premium for the life of the loan is paid at closing.

• The premium can be added to the loan amount and be financed as part of the total loan.

by the lender (with the MI cost reflected in a higher mortgage interest rate).

Split Premium Option

• A lump sum premium is paid at closing to cover a portion of the total MI premium.

• Subsequent payments are made with the monthly mortgage payment.

• Borrower-paid only.

Annual Premium Option

• This is our least common option.

• The mortgage insurance premium is paid each year.

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MONTHLY PAYMENT MI PROGRAMS FROM UNITED GUARANTY

PostPay Monthly (default payment method)

•

No mortgage insurance premium has to be paid at closing.

•

The premium is paid in arrears. The first premium will be billed the month after the mortgage insurance is activated and is due by the end of the following month.*

Non-PostPay Monthly

•

One month’s premium is due at closing.

•

The lender must choose to change the default selection from PostPay to this option.

For Both Monthly Options

•

Coverage goes into effect on the date the loan closes.

•

The borrower pays no (or a minimal) premium payment at closing, depending on the premium option.

•

There is no increase in the interest rate or loan amount to cover the premium.

•

Monthly options may be cancelled (under the Homeowners Protection Act of 1998; HPA) when the mortgage insurance is no longer needed.

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SINGLE-PREMIUM MI PROGRAMS FROM UNITED GUARANTY

Single Premium—Paid at Closing

•

One-time premium payment due at closing covers the entire life of the loan.

•

An approved third party can make the premium payment for the borrower.

•

Mortgage insurance may be cancelled when it’s no longer needed.

•

If there is any amount of mortgage insurance premium that hasn’t been applied to the loan (unearned premium), it may be refundable.

•

Premiums can be refundable or non-refundable. If the mortgage insurance is cancelled under the HPA, a refund of unearned premium is always allowed.

Single Premium—Financed

•

The entire MI premium is added to the mortgage balance.

•

The amount added to the mortgage balance may be limited by the lender and/or investor.

•

Mortgage insurance may be cancelled when it’s no longer needed.

•

Premiums can be refundable or non-refundable. If the mortgage insurance is cancelled under the HPA, a refund of unearned premium is always allowed.

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LENDER-PAID MI PROGRAMS FROM UNITED GUARANTY

Lender-Paid Mortgage Insurance

•

Available on Single, Annual, and Monthly premiums.

•

Mortgage insurance premium is paid by the lender.

•

Lender-Paid mortgage insurance is not refundable.

•

The lender typically recovers the premium by charging a higher interest rate.

•

Cannot be cancelled by borrower; lender can cancel at any time.

•

There is no premium due at closing or with the borrower’s monthly loan payment.

•

The borrower may get a tax deduction for the additional interest from the higher interest rate.*

•

Suited for borrowers who plan to stay in the home less than 10 years.

Looking for more purchasing power compared to monthly?

•

Lender-paid MI typically lets the borrower buy 5% more house for the same monthly payment.

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UNITED GUARANTY’S PERFORMANCE PREMIUM

As the first and only true risk-based pricing model in the industry,

Performance Premium

®

_{goes beyond the usual rate-card pricing}

and considers each loan individually.

• Home buyers who have been responsible with their credit can

save money.

• Gives your clients opportunities that can’t be found on the rate cards

used by other mortgage insurers.

• Allows coverage for borrowers with non-traditional credit.

• Includes coverage for non-primary residences (for example, second

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MORTGAGE

INSURANCE

CANCELLATION

The borrower can request cancellation of private mortgage insurance

when it’s no longer needed, or the lender will cancel it automatically.

Automatic Cancellation

*

•

When the principal balance of the mortgage is first scheduled to reach 78% of the original value of the property.

•

The borrower must be current on mortgage payments.

Borrower-Initiated Cancellation

*

•

When the principal balance of the mortgage reaches 80% LTV based on original value and scheduled amortization (or based on actual payments).

•

There can be no subordinate liens.

•

The property has not declined in value.

•

The borrower must be current on payments and have a good payment history (no payment more than 30 days late in the past year, or more than 60 days late in the past two years).

*Requirements vary by lender and may not be all-inclusive. Borrower must contact their loan servicer for details on initiating cancellation before reaching 80% LTV based on the original value of the loan.

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FHA INSURANCE CANCELLATION

The FHA insurance premium could total as much as THREE TIMES

THE COST of United Guaranty MI over the life of the loan.

UNITED GUARANTY PERFORMANCE PREMIUM

FHA Financed Borrower-Paid Monthly Borrower-Paid Single Lender-Paid Single

Total MI Cost over

Life of Loan $9,860 $4,720 $15,626

$36,379

•

FHA insurance is not cancelable on new loans over 90% LTV.

•

FHA insurance on loans at 90% LTV and under is not cancelable until after 11 years.

Private MI remains refundable for certain plans, even for NO-REFUND financed premiums, under certain conditions.

Assumptions: Base loan amount $200,000, two borrowers, both with 720 credit scores, 41% DTI, 30-year fixed-rate purchase loan, single-family

house, stable market, 95% LTV United Guaranty, and 96.5% LTV FHA. Performance Premium pricing as of May 12, 2014. FHA Rate source: FHA Mortgagee Letter 2015 -1.

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THE ADVANTAGES OF CONVENTIONAL LOANS WITH MI

Conventional insured (non-FHA) loans often have a lower monthly

payment with more product options than FHA loans

.

For Qualifying Buyers:

• Potential to save thousands in mortgage

insurance premiums.

• Gifts / grants allowed to satisfy borrower’s

minimum contribution.*

• Monthly and single MI options offer flexibility:

• Zero cash for premiums due at closing

for monthly premiums or financed plans (including third-party financed options for singles).

• Cancelable and potentially refundable.

• Increased purchasing power and affordability.

For REALTORS®:

• Competitive edge

• Client savings on monthly mortgage

payment, repeat business, and referrals from satisfied customers.

• Potential for faster and less complicated closings:

• No FHA appraisal / appraiser requirements.

• Easier for the seller to meet inspection

requirements.

• Less paperwork can mean faster closing.

ADVANTAGES OF CONVENTIONAL LOANS WITH PRVATE MI

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COMPARE THE NUMBERS: OUR MI RATES VS. FHA

United Guaranty Performance Premium FHA

Borrower-Paid Monthly Lender-Paid Single FHA Financed

$1,037.14

Total Monthly Payment

$983.88

Total Monthly Payment

$1,055.47

$96.67

Monthly MI Premium 58 bps

$4,240

Up-front MI Premium Paid by Lender 212 bps

$3,500

Up-front (175 bps) +

$141.67

Monthly (85 bps) 3.875% Interest Rate 4.25% Interest Rate 3.50% Interest Rate Five-Year MI Savings

$6,444

Compared to FHA Five-Year MI Savings

$8,551

Compared to FHA

Total Cost of MI over Life of Loan

$9,860

$15,626

$36,379

Assumptions: Base loan amount $200,000,

two borrowers, 720 credit score, 41% DTI, 30-year fixed-rate purchase loan, single-family house, stable market, 95% LTV United Guaranty, and 96.5% LTV FHA. Total monthly payment includes PI + MI. Performance Premium pricing as of May 12, 2014. FHA rate source: FHA Mortgagee Letter 2015-1.

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COMPARE THE NUMBERS: OUR MI RATES VS. FHA

Borrower-Paid Monthly Lender-Paid Single FHA Financed

$96.67

Monthly

$4,240

Up-front paid by lender

$3,500 Up-front + $141.67 Monthly 58 bps 212 bps 175 bps (upfront) 85 bps (annually) 4.0% Interest Rate 4.375% Interest Rate 3.75% Interest Rate Five-Year MI Savings

$6,500

$8,604

Compared to FHA

$10,534

$15,747

$36,587

Assumptions: Base loan amount $200,000,

two borrowers, 760 credit score, 41% DTI, 30-year fixed-rate purchase loan, single-family house, stable market, 97% LTV United Guaranty, and 96.5% LTV FHA. Total monthly payment includes PI + MI.

Performance Premium pricing as of May 12, 2014 using 35% coverage. FHA rate source: FHA Mortgagee Letter 2015-1.

* Certain restrictions apply. Visit www.ugcorp.com for complete details.

• Borrowers can use gifts

and grants for the entire down payment.*

• United Guaranty allows

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COMPARE THE NUMBERS: OUR MI RATES VS. FHA

Borrower-Paid Monthly Lender-Paid Single FHA Financed $1,025.47

Total Monthly Payment

$998.57

$1,055.47

$85

Monthly MI Premium 51 bps

$3,920

Up-front MI Premium Paid by Lender 196 bps

$3,500

Up-front (175 bps) +

$141.67

Monthly (85 bps) 3.875% Interest Rate 4.375% Interest Rate 3.5% Interest Rate Five-Year MI Savings

$7,144

$8,546

Compared to FHA

Assumptions: Base loan amount

$200,000, two borrowers, 760 credit score, 41% DTI, 30-year fixed-rate purchase loan, 18% charter coverage, single-family house, stable market, 97% LTV United Guaranty, and 96.5% LTV FHA. Performance Premium pricing as of May 12, 2014. FHA rate source: FHA Mortgagee Letter 2015-1.

$9,350

$15,746

$36,379

* Certain restrictions apply. Visit www.ugcorp.com for complete details.

AFFORDABLE HOME PROGRAMS

Offer first-time home buyers a low MI premium with United Guaranty.

Lenders choosing the minimum 18% MI coverage on a 97% LTV loan can help more young buyers and families purchase a home now.

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CONVENTIONAL LOANS WITH MI CAN MEAN A LOWER COST

Get your client thinking outside of

rate—focus on best payment!

United Guaranty Residential Insurance Company | United Guaranty Mortgage Indemnity Company

230 N. Elm St., Greensboro, NC 27401 877.642.4642 | www.ugcorp.com

United Guaranty is a marketing term for United Guaranty Corporation and its subsidiaries. United Guaranty, PostPay, and Performance Premium are registered marks. Coverage is available through admitted company only. REALTOR® a registered mark of the National Association of Realtors®.

Carolyn Delaney| Senior Account Executive Cell: 571-212-1411