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19
SURVEY: MORTGAGE INSURANCE COSTS
NEGATIVELY IMPACTS HOMEOWNERS
A new survey reveals a growing number
of homebuyers have to purchase mortgage
insurance (MI) along with their home—and
many aren't prepared for the additional cost.
According to research results put out by TD
Bank, 37 percent of homeowners who purchased
within the last decade required MI. Looking at
just the last two years, that number is up to 43
percent, reflecting the trouble buyers are having
meeting normal down payment minimums as
home prices march up.
Of those who have had to go with insurance,
65 percent said the additional premium left them
paying a higher monthly payment than they had
originally anticipated, and 53 percent reported
experiencing a negative impact because of that
additional cost, which averages about $100 per
month, the bank estimates.
"PMI [private mortgage insurance] has had
a definitive impact on many homebuyers—
including making them rethink or delay the
purchase of a home in light of not being able to
meet monthly mortgage payments," said Michael
Copley, EVP of retail lending at TD Bank.
e effects of MI costs are felt the most
among millennial homeowners, 43 percent of
whom were not able to make the normal 20
percent down payment and required insurance.
Among Gen X-ers, 37 percent of recent buyers
have needed MI, while less than a quarter—23
percent—of baby boomers have needed it.
Millennials were also more likely to
say insurance requirements impacted their
homebuying decisions, with 30 percent either
delaying their purchase or going with a smaller
home. Meanwhile, nearly half of that age group
said they've had to cut back or delay purchases of
other items in order to handle the higher cost.
With the Federal Housing Administration
(FHA) now requiring mortgage insurance for
the entire life of its loans, Copley urged would-
be buyers to explore all avenues available to them
if they're unable to make a 20 percent down
payment.
"While FHA loans may be available,
homebuyers, especially first-time buyers,
may not realize the options available to them
that don't require PMI insurance," he said.
"Prospective buyers should meet with a lender or
financial institution to find a loan solution that
meets their needs and monthly budget."
