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Why Mortgage Insurance (MI)?

You have many options available when buying a home. Taking out a second mortgage, (a piggyback loan), is one option that does not require mortgage insurance (MI). But is it the best option? Many factors need to be considered, including total monthly payments, rising interest rates, prepayment penalties and others. Making MGIC mortgage insurance an option in your home-buying decision opens up a world of possibilities.

With MGIC MI, you can:

  • save money compared to piggybacks
  • simplify the mortgage process
  • create a single payment
  • increase buying power
  • create broader cash-flow options
  • cancel coverage
  • receive a refund
  • deduct MI from income taxes (2007)

MI Options
Review your options with your mortgage originator and choose the best fit for your situation. Some of MGIC's more popular programs:

  • With MGIC SingleFile, you pay no mortgage insurance premium. To cover the cost of the premium, the lender may slightly increase loan fees or the interest rate — generally, the interest you pay is tax deductible. Often, SingleFile results in a lower monthly payment than with other non-MI options, such as piggyback loans.
  • MGIC's Refundable Single premium plan gives you the option of financing the MI premium into your loan. You benefit with a low monthly payment, tax-deductible interest paid on the financed premium, and a possible premium refund when you cancel your MI during the first five years of the loan.
  • MGIC monthly premiums are perfect if you're having difficulty accumulating cash for closing, but are otherwise qualified to buy a home. With this plan, you would experience no increase in the loan amount and need no cash at closing. Your MI coverage can usually be cancelled once your loan amount falls to 75 - 80% of your home's value. For most homebuyers, this happens in 2 - 4 years.

The important thing to remember is that MGIC mortgage insurance gives you options. Buying a home is one of the biggest financial decisions you may ever make. You want to go into that decision knowing all your options.