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By Jason Boone


Over the last 12 months many home buyers with poor or subpar credit have been able to purchase homes in Bend and across the United States especially if they had credit scores under 680.


Although there have been many opportunities for home buyers with low credit scores to purchase homes that could change soon if changes are made to mortgage insurance premium requirements which would increase premiums for home buyers with credit scores of 700 or lower by as much as 0.65 percentage points or more.


What Is Mortgage Insurance?


BPMI or “Traditional Mortgage Insurance” is a default insurance on mortgage loans provided by private insurance companies and paid for by borrowers. BPMI allows borrowers to obtain a mortgage without having to provide 20% down payment, by covering the lender for the added risk of a high loan-to-value (LTV) mortgage.


The US Homeowners Protection Act of 1998 allows for borrowers to request PMI cancellation when the amount owed is reduced to a certain level. The Act requires cancellation of borrower-paid mortgage insurance when a certain date is reached. This date is when the loan is scheduled to reach 78% of the original appraised value or sales price is reached, whichever is less, based on the original amortization schedule for fixed-rate loans and the current amortization schedule for adjustable-rate mortgages. BPMI can, under certain circumstances, be cancelled earlier by the servicer ordering a new appraisal showing that the loan balance is less than 80% of the home’s value due to appreciation.


This generally requires at least two years of on-time payments. Each investor’s LTV requirements for PMI cancellation differ based on the age of the loan and current or original occupancy of the home. While the Act applies only to single family primary residences at closing, the investors Fannie Mae and Freddie Mac allow mortgage servicers to follow the same rules for secondary residences. Investment properties typically require lower LTVs.


There is a growing trend for BPMI to be used with the Fannie Mae 3% down payment program. In some cases, the Lender is giving the borrower a credit to cover the cost of BPMI.


Source – Wikipedia


Time To Buy Now


If you’ve been thinking about buying a home in Bend don’t wait for proposed changes to mortgage insurance to go into effect it’s time to buy now.


Contact me today at (541) 383-1426 or email me at to learn more about the latest homes for sale in Bend.