An important tool to any investor is lender mortgage insurance to help save you money over the lifetime of your mortgage. The idea of lender paid mortgage insurance is easy: pay an upfront fee when you get your loan or take a higher interest rate and your lender will pay the mortgage insurance for you. Getting the lender mortgage insurance on your loan can actually save you a considerable amount of money on each monthly mortgage payment. This is a smart idea when it comes to commercial property investing because the more saved on mortgages and upkeep costs the more profit you will receive. In this article we will look at the benefits of lender paid mortgage insurance and why it’s a viable option when making any commercial property investments or purchases.
Additional Benefits of Lender Mortgage Insurance
Lower Monthly Payments
Of course the biggest benefit of opting for lender mortgage insurance is the lower monthly payments. Mortgage insurance can be more costly than monthly interest rates or fees depending on the property.
Qualify for More Money
Since your monthly payment is so low with lender paid mortgage insurance you can typically qualify for more money in other loans and lending.
Short-term Loans
One reason lender paid mortgage insurance is popular and advantageous for commercial properties is their convenience for short-term loans. Most commercial property loans are much shorter than the residential loan average of 30-years but with a 30-year loan you must make payments against the LPMI (Lender Paid Mortgage Insurance) for the life of the loan, which costs you more than other loan options.
Low Loan to Value Ratio
If your loan to value ratio is close to 80% then lender paid mortgage insurance isn’t your best, most cost effective option. If you’re planning on getting rid of the loan soon then it may be beneficial but typically having a low loan to value ratio will help you see more benefits with lower payments from an LPMI.
Who Benefits Most from Lender Paid Mortgage Insurance
High-income Earners
If you can get approved for an LPMI then it’s easily the most attractive loan option for anyone with a high income. The higher interest rate will typically lead to a higher tax deduction each year while lower income people will not see any additional tax benefits or flexibility.
Why It Helps Commercial Properties
Lender mortgage insurance is commonly seen as a huge benefit for residential loans but these same benefits extend to commercial properties as well. You want to set yourself up for as much profit and success as possible with any commercial real estate investment and since any loans you take out for commercial investing will be short term and initially high interest you want to take advantage of the tax benefits and lower monthly payments.
Protecting Your Investment Long-Term
If you’re interested in commercial real estate investing and want to give yourself the best chance for prolonged success then call the team at Landwin. For over 30 years our team has led the industry finding successful commercial real estate opportunities for clients of all budgets and experience levels. Our formula eliminates many high-risk options and leaves investors with plenty of great investment opportunities to choose from.
If you’re taking out a loan to invest or purchase a commercial property then lender mortgage insurance is a great way to get yourself lower monthly payments and to maximize the profit no matter the length of your loan. Instead of navigating everything on your own however let the friendly team at Landwin help you every step of the way. Please call us today to speak with a member of our staff with any questions regarding commercial real estate investing or if you are interested in learning more about lender paid mortgage insurance before making a decision.