United Guaranty Helping Home Buyers with Down Payment Options, Free Education, and Resources
Increases in housing costs may price some borrowers out of their desired homes, neighborhoods.
GREENSBORO, NC, June 25, 2015
United Guaranty Corporation is helping renters become homeowners with flexible down payment options and education to enable young families and individuals to use mortgage insurance to take advantage of the substantial savings a home purchase can provide.
United Guaranty’s Home Buyer Education website provides buyer resources, including:
- A rent-versus-buy analysis detailing how a $175,000 home purchase provides $23,589 in savings over five years versus renting—due to price appreciation (at an assumed 1 percent per year), potential tax savings, and accumulated equity.
- Mortgage insurance options for down payments as low as 3 percent for qualified borrowers who have been responsible with credit.
- A free online education course that can satisfy requirements for Fannie Mae's MyCommunityMortgage® and Freddie Mac's Home Possible AdvantageSM programs—which offer qualifying first-time home buyers low down payments, lower MI premiums, and expanded eligibility requirements.
“Recent studies have shown there are many Millennials and young families who could qualify for a mortgage because they’ve been responsible in using credit, but many of them mistakenly believe they won’t qualify for a mortgage or need to save up for a very large down payment,” said United Guaranty President and CEO Donna DeMaio. “United Guaranty is committed to helping qualified young families and individuals realize the goal of owning a home, and we can provide a lot of help, as well as flexible down payment options with mortgage insurance”
Down payment is often cited as a key barrier preventing young borrowers from making a home purchase. RealtyTrac® estimates it takes a typical borrower 12.5 years to accumulate enough savings for a 20 percent down payment (assuming a personal savings rate of 5.6 percent).
United Guaranty mortgage insurance provides for down payments of as little as 3 percent for those who qualify—and that 3 percent can often come from gift funds, meaning the purchaser can get help from relatives.
- 20 percent (without mortgage insurance) $40,000.
- 5 percent (with mortgage insurance) $10,000
- 3 percent (with mortgage insurance) $ 6,000.
When it comes to mortgage insurance, borrowers face a choice between private mortgage insurance and FHA.
A key difference between FHA and private mortgage insurance is that with most mortgage insurance options, the lender is required to cancel coverage once the borrower achieves a predetermined equity level (20 percent)—reducing the total monthly mortgage payment.1
With FHA, borrowers who make a down payment of less than 10 percent will continue to pay for mortgage insurance as long as they keep the loan.
FHA insurance can be cancelled after 11 years on loans originated with a down payment of 10 percent or more.
Some other benefits of MI compared to FHA:
- Available on higher loan amounts.
- Available on more types of mortgages.
For buyers with less-than-average credit or who have certain factors that make their loans somewhat risky, an FHA loan might be the best choice.
For many home buyers with a strong history of using credit wisely, United Guaranty mortgage insurance costs less up front and over the life of the loan than FHA.
United Guaranty also provides multiple payment options, including PostPay®, a monthly premium that requires no premium when the loan closes—benefitting buyers seeking lower closing costs. The lender will collect the monthly premium as part of the borrower's monthly mortgage payment.
For a comparison showing MI costs for FHA versus United Guaranty, visit ugcorp.com/FHA
About United Guaranty2
United Guaranty Corporation and its subsidiaries provide certainty to mortgage lenders through world-class underwriting, quality risk solutions, and dynamic pricing available through Performance Premium,® the industry's only MI pricing that is truly risk-based. Established in Greensboro, North Carolina, in 1963, United Guaranty is a company of American International Group, Inc.
Jo Fleischer, Director – Media Relations
O: 336.333.0433 | C: 336.609.3957
1 Individuals who selected a borrower-paid single-premium product may be entitled to a refund of unearned premium rather than a mortgage payment reduction. See the Federal Homeowners Protection Act of 1998 for full details on cancellation of mortgage insurance.
2 United Guaranty is a marketing term for United Guaranty Residential Insurance Company and United Guaranty Mortgage Indemnity Company. United Guaranty is a registered mark. Coverage is available through admitted company only.