Despite market growth, mortgage insurance remains largely misunderstood
“You would be amazed at how many people do not understand MI,” says Patrick J. (PJ) Harrigan, VP of the western division at Radian Guaranty, a private mortgage insurance provider.
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According to Harrigan, many individuals, from loan officer to the general public, do not understand how mortgage insurance can be used to help borrowers get into the home of their dreams. “Our goal is to help more people achieve homeownership by utilizing low down payment options that are available to them,” he says. With MI, many borrowers are able to own a home with as little as 3% down – a significant drop from the typical 20% down payment typical required for a conventional loan, which often times can takes years to accumulate.
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“That is the great thing that people don’t understand. I hear people say ‘I hate MI,’ but if you wait until you can put 20% down on the purchase price of a house, then you lose any tax benefits or any opportunity for appreciation,” says Harrigan. “I like to say that by putting 20% down, you are paying 100% in interest because often times you are paying rent and getting no value from it. MI allows people to access homeownership and that is what we focus on.”
