Mortgage insurance (MI) is a policy required by mortgage companies to protect them from losses if a property owner defaults on their loan. When the lender goes to relinquish a house, they are unlikely to recover the total amount owed on the loan. MI applies to first mortgages where the home owners are obtaining more than 80% of the sale price of the property. There is generally an up-front MI fee due at closing and recurring fees based on a percentage of the amount of the loan. Newton MA financing MI explanation and recommendations on getting rid of MI are shown below.
MI percentages depend on the type of loan. Home owners should ask a mortgage professional to obtain sample rates and evaluate the impact that it will have on monthly mortgage payments. Rates can also change from time-to-time, so be sure to get up-to-date figures when you are determining how much house you can afford. Once you close on a loan, the MI rate for that specific mortgage will remain the same for the life of that loan. With certain loans, such as FHA, you may be entitled to a refund of a portion of the up-front MI charged at closing if you refinance within a certain period of time.
Recommendations on Getting Rid Of MI
Monthly MI charges will normally be removed when the mortgage is paid down to 80% of the original purchase price. Most banks allow removal of MI a little earlier if prompted by the homeowner when that percentage mark is reached. Check your loan paperwork for the percentages that apply to your loan. In an increasing real estate market, homeowners can also request a new appraisal (from a third-party approved by the lender) to demonstrate that the value of the home has improved and that you may have therefore reached the 80% mark earlier than expected.
Newton MA Financing MI Explanation and Help
Most home buyers are unable to provide a 20% down payment and subsequently cannot avoid MI. By knowing how MI works and how to get rid of it, home buyers can avoid paying more MI than needed. We hope that you found this Newton MA financing MI explanation useful and will be able to use the recommendations on getting rid of MI. For additional information on this and other related topics, contact Darleen Foster by calling 617-448-7894 or emailing DarleenFoster@remax.net and/or Bradford Pratt at 781-316-5760 or send an email to BradfordPratt@remax.net