If your thinking of buying or maybe refinancing, consider this when it comes to Private Mortgage Insurance
Private Mortgage Insurance, is insurance that a lender requires someone to have when they are lending on a property that will have a Loan to Value over 80%
Private Mortgage Insurance, protects the lender in the event of a default, and in today's market we can see why Lenders have this requirement over 80% Loan to Value.
In the past, if a client had Private Mortgage Insurance, then it was their responsibility to monitor their mortgage and the value of their home increasing, either by paying down the mortgage and/or the value increasing in their home to at or below 80% Loan to Value, in order to drop the PMI. Now the lenders have to monitor these Increases, as well as the consumer, and then remove the Mortgage Insurance Premium, once it has reached 80%, it has been made a little easier to keep an eye on what you are paying for.
In order to cancel Private Mortgage Insurance, you can not of been late on your mortgage in the last two years and you need to provide proof that your home has increased in value in addition to what you currently owe, so that the new Loan to Value is 80% or less, lenders will allow or request a Appraisal for this proof, at a cost to the consumer.
There is a law that does state that if your Loan to Value reaches 78% or lower than The PMI company must cancel the premium automatically and refund any unused portion to you, but you should alway's check for yourself, or Contact your Mortgage broker to assist you..
In today's market Getting a second mortgage is still an option, if you are planning to purchase, although with tighter guidelines, it seems worth taking Private Mortgage Insurance, and not having second mortgage closing costs and a second mortgage payment, also PMI is tax deductible as well is your interest on your home, so as a write off you will do fine, mortgage insurance is not a dirty word it's there to protect the lenders so we are all protected in the long run..
Mortgage Insurance is easy enough to learn about, so please call your Mortgage Broker to help educate you on this subject, they will be glad to help!!
Good Luck with your new purchases..
Thomas R. Weiss
Licensed Mortgage Consultant
Comments(1)