Wave Goodbye to Your Mortgage Insurance

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November 2019
Wave Goodbye to Your Mortgage Insurance
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Ah that pesky Mortgage Insurance- Isnt there a
way to get rid of that extra monthly payment?
Good news! There are ways to eliminate that
additional Debt. But ??rst, lets go over what
Mortgage Insurance is. What is Mortgage
Insurance? Mortgage Lenders often require
Mortgage Insurance for certain types of loans
This insurance lowers a Mortgage Lenders
??nancial risk and enables homeownership- even if
you dont have enough cash to put down 20 for
down payment upfront. How do I get rid of the
Mortgage Insurance Payments? Ever heard of LTV?
Understanding LTV (loan-to-value ratio) can be
key in ridding yourself of Mortgage Insurance.
Your LTV (loan-to-value ratio) basically measures
how much equity you have in your home. Figure
the following equation (Your current loan
balance) (Original value of your property) x
100 Your LTV For example, if you put 10 down
on a 200,000 home, your initial loan balance
would be 180,000 and your LTV would be 90. The
more payments you make, the lower your
LTV (loan-to-value ratio) will be.
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To rid yourself of mortgage insurance, the
re??nancing tactic works if your home has gained
substantial value since the last time you got a
mortgage. For example, if you bought your house
four years ago with a 10 percent down payment,
and the homes value has risen 15 percent since
then, you now owe less than 80 percent of what
the home is worth. Under these circumstances, you
can re??nance into a new loan without having to
pay for PMI. Home Values change yearly. They can
go up or down. For most markets, inventory in
the past few years has been low and homeowners
have seen a decent increase in value due to the
demand for homes from buyers. Ways Your Home
Value Can Increase Home Upgrades Home
improvements can also add value to your home.
Have you added a bathroom or bedroom? Have you
remodeled the home in any way that might have
increased the value? If so, you might want to
see how much higher your value is to re??nance
into a new and better No PMI Mortgage. Energy
Ef??cient So this one is along the same lines
as a home upgrade with the exception that youre
making the home more environmentally friendly
and ef??cient. Some simple ways of increasing
energy ef??ciency in your home would be
installing double-pane windows, enhanced attic
insulation, LED lighting and ef??cient
appliances These items can increase your home
value and entice energy-conscious buyers. Make
Your Home a Smart Home! Smart technology is
growing. With that being said, its worth
installing smart gadgets into your home- making
your home a Smart Home. Different kinds of
smart devices include thermostats, ??re
detectors, carbon monoxide detectors, security
cameras, door locks, and lighting. These devices
enable ef??ciency and give homes a more modern
edge on the competition. Types of mortgage
insurance PMI Mortgage insurance for
conventional loans (loans that are not part of
government programs) is called private mortgage
insurance (PMI). PMI is required if your LTV
(loan-to-value) is above 80 (meaning your down
payment was less than 20). PMI cancels
automatically when you pay off enough of your loan
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that your LTV (loan-to-value) reaches 78, or if
youve reached the midpoint of your loan
term. Its important to remember, once youve met
your Mortgage Lenders criteria, and youve
reached the 80 threshold, PMI can also be
canceled a little earlier but you would have to
contact your current Mortgage Lender to do
so. MIP On the other hand, mortgage insurance
for FHA loans, called mortgage insurance premium
(MIP), is required for all borrowers
regardless of their LTV (loan-to-value). If your
LTV (loan-to-value) was greater than 90 when you
bought your home (meaning you put less than 10
down), youll have to pay MIP for the entire
life of the loan. If your LTV (loan-to-value) is
90 or less (meaning you put more than 10 down,
or even more than 20 down), youll be required
to pay FHA MIP for 11 years, or for the life of
the loan- whichever occurs ??rst. At times,
homeowners take an FHA loan to purchase a home
due to qualifying ratios, credit scores, and
guidelines. But if your credit scores improve,
or maybe youre making more money because of a
pay increase, it might make sense to re??nance
out of an FHA loan and into a conventional option
with PMI (private mortgage insurance). You may
ask yourself, Why would anyone re??nance from
one mortgage that has MI (Mortgage Insurance) to
another mortgage has also had PMI (private
mortgage insurance)? Because with a
conventional option you will not get stuck paying
mortgage insurance for the life of the loan.
Depending on the scenario, you might pay an even
lower PMI (private mortgage insurance) payment
and for a much shorter period of time, saving
you thousands of dollars yearly and for the life
of the loan. So, if you are paying mortgage
insurance, hopefully, youll be waving good-bye
soon! Want to check out current mortgage
options? Click here
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