Mortgage insurance (MI) is a policy mandated by mortgage providers to protect them from losses if a property owner fails to pay their mortgage. When the mortgage provider goes to relinquish a property, they are unlikely to recover the total remaining balance on the loan. MI applies to first mortgages where the property owners are obtaining more than 80% of the purchase price of the home. There is typically an up-front MI fee due at closing and recurring fees based on a percentage of the amount of the loan. Waltham MA mortgage MI explanation and recommendations on getting rid of MI are shown below.
Amount of MI
MI rates vary based on the type of loan. Home buyers should consult with a mortgage professional to obtain sample rates and evaluate the impact that it will have on anticipated mortgage payments. Rates can also change from time-to-time, so be sure to get up-to-date figures when you are evaluating your ability to purchase a home. Once you close on a loan, the MI rate for that particular mortgage will remain the same for the life of that mortgage. With certain mortgages, 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
Recurring MI fees will typically be removed when the mortgage 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 attained. Check your mortgage paperwork for the percentages that apply to your mortgage. In an inclining real estate market, homeowners can also obtain a new appraisal (from a third-party approved by the mortgage company) to document that the value of the home has increased and that you may have therefore reached the 80% mark earlier than expected.
Waltham MA Mortgage MI Explanation and Help
Most home buyers are unable to provide a 20% down payment and as a result cannot avoid MI. By understanding how MI works and how to get rid of it, home buyers can realize significant savings. We hope that you found this Waltham MA mortgage 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 Brad and Darleen Pratt at RE/MAX On the Charles.