PASADENA, Calif. -- Countrywide Funding Corp. is offering a program under which mortgage insurance is paid for by the lender. The company said the program would significantly reduce up-front expense to borrowers.
The insurance will be available on all types of Countrywide loans. The program is likely to be especially useful to first-time homebuyers and those with low to moderate incomes, who often have a smaller down payment and limited cash resources, according to the announcement.
Usually, a full year of mortgage insurance premiums must be paid at closing for loans with down payments under 20%.
Under the lender-paid program, consumers pay no mortgage insurance costs at closing, Countrywide said. Although the interest rate is slightly higher than for other mortgages, the after-tax monthly payment is lower because interest can be deducted from federal income taxes.