Home > Rates > 15 is greater than 20

15 is greater than 20

A new myth-busting angle on mortgage finance

Help borrowers reshape their old way of thinking

Many borrowers believe 20% down on their home purchase is their only option. But you know it’s not.

Take this opportunity to reinforce your role as a Trusted Advisor by offering a slightly different angle to your borrowers who have 20% to put down: Ask them to consider putting 15% down instead.

Their monthly principal and interest payment will go up a bit, and they’ll need to purchase a small amount of MGIC mortgage insurance. BUT they get to hold on to the difference… in their savings… for investing… for making home improvements.

The effects of moving from Point A to Point B

  • By putting 15% down instead of 20%, borrowers actually save money on GSE delivery fees
  • Using that discount in combination with MGIC borrower-paid single or monthly premiums provides a wealth of opportunities for borrowers at minimal cost

Shaping the opportunity

There are numerous borrowers who could take advantage of this new line of thinking. Here are some reasons why they should:

  • During the first year after closing on a home, homebuyers tend to spend $8,233-$10,601 on appliances, furnishings and property alterations.1 If they put all of their savings into the 20% down payment, will they be prepared for these normal expenses?
  • 30% of Gen-Xers took loans or early withdrawals from their retirement savings during the Great Recession.2 Do you have borrowers who’d like to replenish those funds? Does your institution offer IRAs?
  • 30% of 2017 and 2018 purchase loans sold to Fannie Mae and Freddie Mac were done at LTVs between 75.01%-80%3
  • 68% of Millennial first-time homebuyers wish to put down less than 20%; 12% say they could put more down but would like to save money for other investments.4 Can you recommend a certificate of deposit from your institution?

1 National Association of Home Builders special study, Spending Patterns of Home Buyers, July 2017
2 Federal Reserve Board of Governors Report, May 2017
3 Morstat data
4 ValueInsured, March 2018

 

Circling back: What goes around, comes around

Even if your borrowers don’t take advantage of the option, they’ll come away understanding you’re working in their best interests. And that translates to lasting relationships and the referrals that come along for the ride.

To learn more about our 15 is Greater Than 20 program, register for one of our 30-minute webinars.

  • Which borrowers should consider putting 15% down instead of 20%
  • What it will cost the borrowers… and what they gain
  • Which MGIC premium plans work best with this concept
  • The opportunity in the market and how to use it with referral partners