Reservations for MassHousing mortgages have tripled compared to previous weeks. The surge in demand is being fueled by our No-MI Mortgage, which was rolled out January 23.
In the first three weeks of 2012, MassHousing reserved 126 first mortgages valued at $28 million. Since that time—i.e., since we've made available the No-MI loan—we've reserved 663 loans for $161.4 million.
All MassHousing Mortgages offer competitive interest rates, require low downpayments, have no hidden fees and are serviced locally by the Agency. Unlike a traditional MassHousing mortgage, borrowers making downpayments of less than 20% of the purchase price are not required to have mortgage insurance, though they do pay a higher interest rate. The savings and the expanded buying power are substantial. Compared to an FHA loan, a family purchasing a $200,000 home with a $7,000 downpayment would save $125 per month and $45,000 over the life of the loan.
No-MI MassHousing mortgages can be used to purchase or refinance a home. To date, most of the loans have fallen into the latter category. This is particularly beneficial to homeowners whose homes have lost value and had been hesitant to refinance because they didn't want to pay mortgage insurance, or because the added expense of MI negated the savings they would have realized from a lower interest rate.
In addition to the No-MI mortgage, MassHousing continues to offer a mortgage with MIPlus, a unique mortgage insurance that helps you repay your loan should you lose you job. Borrowers do pay a monthly premium for MIPlus protection and the payment may be higher than the No-MI loan, but the interest rate is 0.375% lower. For some, the traditional MassHousing loan is still a preference. One in five of our borrowers still select our MassHousing loan with MIPlus.