Today’s Blog is about Private Mortgage Insurance, normally a boring subject, but now fascinating for a few reasons.
First, Arch MI is now available for strong borrowers as a fantastic alternative to traditional PMI, FHA financing, and 80/10/10 (1st/2nd Combo) financing.
Arch MI is much, much cheaper b/c they use algorithms to calculate risk and PMI rates. Algorithms have been around forever, but there was insufficient data to make them work effectively (see 2008 meltdown). Arch now has 25 years of data over several housing cycles to calculate risk much more accurately, and strong borrowers benefit.
This is significant b/c lending will go the same way eventually, making arduous underwriting unnecessary; the entire loan process will become as simple and as easy as obtaining Arch MI (they only verify 17 data points).
Finally, now that Fannie Mae allows 5% down (95% LTV) financing with Arch MI, FHA financing will become much less competitive for borrowers with excellent credit. Jumbo options with 10% down will also be far more viable (more on that later).
Founder/Broker | JVM Lending
(925) 855-4491 | DRE# 01524255, NMLS# 335646