Mortgage insurance (MI) is a policy mandated by mortgage companies to protect them from losses if a property buyer defaults on their mortgage. When the mortgage company goes to relinquish a property, they are unlikely to regain the total remaining balance on the loan. MI applies to first mortgages where the property buyers are obtaining more than 80% of the value of the home. There is typically an up-front MI fee due at closing and monthly fees based on a percentage of the loan amount. Waltham MA mortgage MI definition and tips on eliminating MI are shown below.
MI rates differ based on the type of loan. Home owners should ask a mortgage professional to obtain accurate figures and understand the impact that it will have on recurring mortgage payments. Rates can also change from time-to-time, so be sure to get accurate figures when you are determining how much house you can afford. Once you close on a loan, the MI rate for that particular loan will never change for the life of that mortgage. With certain loans, such as FHA, you may request a refund of a portion of the up-front MI charged at closing if you refinance within a certain period of time.
Tips on Eliminating MI
Monthly MI fees will typically disappear when the loan is paid down to 80% of the beginning home value. Most banks allow removal of MI a little earlier if initiated by the homeowner when that percentage mark is reached. Check your closing documents for the percentages that apply to your loan. In an inclining real estate market, homeowners can also order a new appraisal (from a company approved by the lender) to illustrate that the value of the home has increased and that you may have therefore reached the 80% mark sooner.
Waltham MA Mortgage MI Definition and Help
Most home buyers are unable to afford a 20% down payment and as a result cannot avoid MI. By knowing how MI works and how to remove it sooner, home buyers can save significant money. We hope that you found this Waltham MA mortgage MI definition useful and will be able to use the tips on eliminating MI. For additional information on this and other related topics, contact Bradford and Darleen Pratt at REMAX on the Charles