Short sales in Palm Beach County Florida- Private Mortgage Insurance Can Be An Obstacle.
Homeowners- You need to check to make sure you do not have PMI insurance on your mortgage and if you do please tell your agent right away. PMI companies, ( Private Mortgage Insurance) can put a BIG damper on your short sale.
The most important thing for you as a homeowner to understand is that PMI insurance is not for YOUR benefit. It is solely for the benefit of your lender. This is insurance that is put in place in case you default on your mortgage and they must foreclose on your house. The PMI company covers the loss, that is, the amount of money the house ends up selling for less your mortgage amount. So let's say that you owe $200,000 on the mortgage of your house but then the lender forecloses on you and sells the house for $100,000. That means they just lost $100,000. So the PMI company will pay the difference to the lender who held your note on your mortgage.
We have found that many homeowners think that this PMI insurance is to benefit them and it does not.
When do you have PMI insurance on your house? Your lender will require you to pay for PMI insurance if you are putting less than 20% down on the purchase of your house. But during the loose lending days, many people were offered no PMI with 80/20 loans.
When prices were skyrocketing, a lot of people had their values going up very quick and then they could get their PMI insurance removed from their loans. This saves a fee of between $70 to $120 typically per month from off your mortgage payment. You had to prove that your house had equity of 78% or more in order to get the PMI removed.
We just had a seller who had done this. So when we asked if she had PMI insurance she said no, she had it cancelled in 2005. She was under the assumption that she had no PMI since she has a receipt of the cancellation and proof of a payment from the lender of a refund to her.
What a surprise it was when we had the negotiator on her file call us and tell us the PMI company wants a note for $10,000 or a cash contribution from the deal of $5,000!
When she called the insurance company to tell them she did not have PMI insurance, she was surprisingly informed that the lender had gone and got their own PMI and paid for it themselves as the market was going down. Hmmm, and she is liable and the lender did not have to disclose any of this to her.
Now we are in a pickle; scrambling around to find this money, maybe the buyer would want to bring some cash to close, probably not. The agents have already contributed and now here we are!
So just because you think you do not have PMI; you might just have it and not know you do. Make a call to your lender to see if you do have lender's placed PMI. The PMI company is in control! They want something from the deal. Be ready with a strategic plan of action. Knowing ahead of time what your agent is going to have to work with gives them more to work with, allowing them to come up with some plan that may just get your through this short sale process.
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Contact Nestor Gasset and Katerina Gasset, CIPS, Realtors®, International Properties and Investments, Inc. Licensed Realtors® in Florida at 561-753-0135 to list your property for sale or to purchase a property in Wellington, Royal Palm Beach, Loxahatchee, Lake Worth, Hypoluxo Island, Lantana, West Palm Beach and the rest of Palm Beach County Florida and Port St Lucie Florida. We are accepting referrals.
Copyright © 2008 By Katerina Gasset, All Rights Reserved.*Short Sales In Palm Beach County Florida- PMI Warning!*
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P.S. If you are listing your home as a short sale in Palm Beach County Florida and Port St Lucie Florida make sure you hire an agent who knows how to do short sales and has the experience to get the job done. We are doing successful short sale packages. Call us at 561-753-0135 to find out more about Palm Beach County Short Sales and Port St Lucie Short Sales.
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