Before you agreed to a new mortgage to buy your South Florida house, condo, or even an investment, did you know you may be required to insure it?
Not just the property…the actual mortgage loan, too.
If you’re asking if homeowner insurance or is mortgage insurance required in Florida, the answer is legally “no.” But be prepared for your lender to require you to insure the mortgage if your down payment is less than a certain percentage, usually at least 20 percent.
Mortgage insurers use a peace-of-mind approach and offer age-appropriate rates in their marketing. But insuring your mortgage is another guarantee for the lender that you won’t default on your loan.
How mortgage insurance works depends on whether you have a government or conventional mortgage loan, or even if you’re a veteran. PMI stands for Private Mortgage Insurance and is usually required in advance until the borrower has satisfied 20% of the loan or has refinanced. MIP stands for Mortgage Insurance Premium and is required for an FHA Loan unless the buyer refinances with a conventional lender. Florida State Housing Initiatives Partnership, or SHIP, provides down payment and closing funds for low and moderate-income residents. But both Palm Beach and Martin counties have closed their SHIP applications at this time, so always check in advance.
How much does mortgage insurance cost per month in Florida?
The cost can range annually from 0.2% to 1%. Will you have options to cover this additional cost? One way is to take out a separate loan, making sure the interest rate is not higher. You can also ask your lender to cover your mortgage insurance if you agree to a slightly higher interest rate for your mortgage.
Mortgage insurance may seem complicated. So, trust your Lang Realty agent to help you navigate loan insurance requirements, providers, and interest rates.
