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Let's Talk about MI Baby! Lets talk about MI.

By
Mortgage and Lending with Mortgage Express

The Short Story on MI...When loan amounts are greater than 80% of a home's value, Lenders can require PMI (private mortgage insurance).  PMI insures a lender's interests.  If a loan goes into default and the costs of the bad loan are not covered by foreclosure and sale of the property, MI kicks in and pays the lender.  In the recent past many mortgage professionals avoided mortgage insurance in favor of "piggyback" loans, but...

The number of loans with MI is on the rise.  WHY?

Congress... thats why!   An  act of congress made mortgage insurance tax deductible for 2007.  This is the government we are talking about, so certain restrictions do apply.

  1. Income limits.  If you make more than $110,000 a year... no deduction for you!
  2. Congress will need to renew this deduction for future years.  Stay tuned for more details.

So what's the big deal?  RISK!  The presence of mortgage insurance on a loan application can make a file more attractive to a lender. With all the recent attention on the sub prime market and new scrutiny of high loan to value transactions, a loan with MI represents a less risky investment.  Lenders are not adrenalin junkies.  They don't jump out of airplanes.  They like solid ground. 

How about the benefits?  Let's name a few.

  1. Tax deductability.
  2. Predictability- When compared to second mortgages that may adjust or come with a balloon feature.
  3. Cost effectivness.  In a rising rate environment like we have today, the cost of mortgage insurance is often times less expensive than other financing options for similar loan amounts.

Call me!  Let's talk about MI.  Does it make sense for you?

Kelli

 

Show All Comments Sort:
Terry Lynch
LAR Notary and Closing Services - Saint Clair Shores, MI

Kelli

I am seeing a rise in people opting for MI. The only thing that scares me about recommending it is the one year  of deductibility. I don't like the idea of my credibility being tied to the whims of Congress renewing the deduction next year, who knows what they will do? 

May 22, 2007 12:02 PM
Tisza Major-Posner
I.V.P.G. - Inland Valley Professional Group - Claremont, CA
DRE#01784679

Hi Kelli,

I enjoyed the post and learned something as well!  Both are big pluses as far as I am concerned.  You might also want to include this on the Localism site to send it out to the consumer easier.  I don't know the rules about your field, but it might behoove you to put it in a region specific area.  Then again, it might not.  I do think that it should be posted on Localism as this is great info for a consumer. 

You have a very fresh and readable style and your energy and enthusiasm come through loud and clear!  Good work!  Oh, and I like the title very much :-)

Take care, help lots of people and have a wonderful day!

Tisza

May 22, 2007 03:31 PM
Kelli Williams
Mortgage Express - Vancouver, WA
Washington Home Loans

Terry...thanks for stopping to comment!  I hear you loud and clear about your rep.  Trying to predict what the Congress will do is as foolish as guessing what mood my 13 year old teenage girl will be in in the next 10 minutes.

 Tisza...Thanks for reading!  I think I pointed this at Localism as well as AR.  I know that I was given the opportunity...OH LORD...I hope I didn't screw that up. :  )

May 22, 2007 04:33 PM
Dan Allred
Allred Realty - Thousand Oaks, CA
DRE#01761967
Kelli- Great post and understanding of the market. It is always good to know what is available to our clients
May 22, 2007 05:27 PM
Anonymous
Anonymous

Dan,  Thanks for stopping by to read.  Thousand Oaks huh!  My family made a choice in 1981 between moving out of Reseda to Thousand  Oaks or heading North to Washington State.  I love the Evergreen State now after 26 years but man ...do I miss the sunshine on some days.

May 23, 2007 03:34 AM
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