Mortgage insurance (MI) is a policy mandated by lenders to protect them from losses if a home buyer defaults on their loan. When the mortgage provider goes to relinquish a home, they are unlikely to recoup the full remaining balance on the mortgage. MI applies to first mortgages where the home owners are financing greater than 80% of the purchase price of the property. There is customarily a lump sum MI fee due at closing and recurring fees based on a percentage of the loan amount. Singer Island FL mortgage MI detail and recommendations on removing MI are detailed below.
Impact of MI on Monthly Payments
MI percentages depend on the type of loan. Home owners should ask a mortgage professional to obtain accurate figures and analyze the impact that it will have on monthly mortgage payments. Rates can also change from time-to-time, so be sure to get current figures when you are evaluating your ability to purchase a home. Once you complete your home purchase, the MI rate for that specific mortgage will remain the same for the life of that mortgage. 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 Removing MI
Recurring MI payments will typically be removed when the loan is paid down to 80% of the beginning home value. Most mortgage companies allow removal of MI a few percentages earlier if prompted by the homeowner when that percentage mark is attained. Refer to your loan 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 lender) to illustrate that the value of the home has increased and that you may have therefore reached the 80% mark earlier than expected.
Singer Island FL Mortgage MI Detail and Help
Most home buyers are unable to afford a 20% down payment and subsequently cannot avoid MI. By understanding how MI works and how to eliminate it, home buyers can realize significant savings. We hope that you found this Singer Island FL mortgage MI detail useful and will be able to use the recommendations on removing MI. For additional information on this and other related topics, contact Sonny Solomon at The Keyes Company by calling 561-247-1047 or emailing sonny@sonnysolomon.com.
