The answer, unintuitively, is to save money.
“It’s counterintuitive and has taken the buyers I’ve been speaking with by surprise,” Mr. Schilling says. “In our rates meeting last week, one of our lenders said they hadn’t seen this situation before in all their years of lending.” That insured rate represents a $2,254 savings over five years. The transactional insurance costs $1,700 , so you’re roughly $500 ahead per $100,000 borrowed over five years.
What to watch out for Buying insurance to get a lower rate does not make sense if you refinance the entire mortgage or buy a $1-million-plus home before you recoup the insurance cost. In those cases, you could lose your low insured mortgage rate. That’s something to consider, given that recouping your cost could take roughly 2.5 to 7.5 years, depending on the situation.
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