Quote:
Originally Posted by opendoor
It's a theoretical possibility though, which creates a slight premium in rates. There are basically 3 buckets of mortgages with a different floor for rates:
Insured: Under 20% down and backed by the government. So risk free in any reasonable scenario, barring total societal collapse or something like that. And the borrower pays the insurance premiums, so there's no cost to the lender for that guarantee. They get the lowest rates generally.
Insurable: Over 20% down, purchase price under $1.5M (used to be $1M until recently) and 25 or less years amortization. These can be insured, but the lender has to the pay the premiums. So while they're also virtually risk free (if insured), the lender has additional costs to get that security, so rates aren't quite as low as with insured mortgages.
Uninsurable: Purchase price over $1.5M, non-primary residence, etc. These can't be insured, so the risk is higher which means a higher interest rate.
So the lowest rates you see online are always going to be for the first group. Insurable can get close, but they're normally slightly higher.
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With those buckets, if the mortgage was insured when you first took it out, isn't is still considered insured everytime you renew it so long as you stayed within the conditions of the mortgage without refinancing or changing the Amortization period? Im one of those irresponsible dolts who has an insured mortgage on my primary residence. After 10 years of payments with some added pre-payments added on as we're allowed by the loan. My amount owing will be about 60% of the original purchase price. But it's still considered an "Insured" mortgage because that's what it originally was.