Now is a Great Time to Eliminate Mortage Insurance!
Is It Time to Cancel the Mortgage Insurance?
Mortgage insurance benefits the lender if a borrower with less than a 20% down payment defaults on their loan. Most conventional mortgages greater than 80% and all FHA loans require the borrower to have this coverage.
Private mortgage insurance on conventional loans can range from 0.5% to 2.25% based on the loan-to-value and the credit worthiness of the borrower. A $350,000 mortgage would have a monthly mortgage insurance premium of $146 a month at the low-end of the scale and over $600 on the high-end.
You may request that your mortgage servicer cancel the PMI when the principal balance reaches 80% of the original value at the time the loan was made. You should have received a PMI disclosure form when you signed the mortgage documents stating the date. If you have made additional principal contributions, it will accelerate the date.
Other criteria considered to cancel the PMI on your loan is:
- The request must be in writing.
- You must be current on your payments with a good payment history.
- The lender may ask that you certify there are no junior liens in effect.
- If the lender is concerned that the value has declined, an appraisal may be required to show that it is eligible.
Conventional loans are supposed to remove the mortgage insurance when the unpaid balance is 78% of the original purchase price.
Another possibility is that the lender/servicer must end the PMI the month after you reach the midpoint of your loan’s amortization schedule. For a 30-year loan, it would be after the 180th payment was paid. The borrower must be current on the payments for the termination to occur.
With the rapid appreciation that many homes have enjoyed in recent years, homeowners may be able to refinance their home and if the new mortgage amount is less than 80% of the current appraised value, no mortgage insurance would be required.
The owner would incur the cost of refinancing but eliminate the cost of the mortgage insurance. To calculate the savings, subtract the new principal and interest payment from the old principal and interest with PMI. Then, divide the savings into the cost of refinancing to determine the number of months necessary to recapture the cost.
FHA loans have two types of mortgage insurance premium: up-front and monthly. For loans with FHA case numbers assigned on or after June 3 2013 with LTV% greater than 90%, the MIP will be paid for the entire term of the loan. If that is the case, refinancing on a conventional loan is the only way to eliminate the MIP. For loans with original LTV% less than 90%, the MIP is collected for 11 years until the balance is 78% of the original amount.
When buying a home, purchasers may not have enough resources for a large down payment. It is understandable to use the best mortgage available to buy the home. The next goal should be to manage the mortgage to lower the overall costs. In this article, we explored eliminating the private mortgage insurance, but let us know if would like any further information to determine what is the best course of action for you.
If you would like any professional residential Real Estate advice, contact us at Paramount Real Estate Services. 1008 12th St. SE Salem, OR 97302 503-851-1645
Also, to mobilize us right away to help you move, visit us here:
Home Sales during COVID 19
Things Have Changed
The soothsayer in Shakespeare’s Julius Caesar issued his famous warning “Beware the Ides of March.” Who knew that in 2020, around the middle of March, the world, as we knew it, would force such dramatic changes on us from the Coronavirus.
In America, it has brought our economy to its knees as we sheltered in place for over four months. During this time, changes have affected our lives and many of those changes could be permanent.
Previously, smaller homes were becoming the trend for not only efficiency but upkeep so owners would have more time to do things including travel. Now, travel is minimal and our world, in some respects, is reduced to our home.
For families with children, their home has become a school. With so many people working from home, it has become our office or store or studio. If there is more than one working adult in a home, it needs to have space for each party to work. The home fitness industry is experiencing record sales in exercise equipment so the home can become a gym.
Since we’re all spending more time at home, it is also the place to recreate. We’re cooking more; a larger kitchen and dining area would be nice. We want to enjoy the yard, garden, pool or balcony and our current home may not even have them or we’d like to upgrade.
People are wanting and needing more space to do all of these things at home. Many experts are anticipating that these changes we thought were temporary may be part of the new normal even after a vaccine and cure have been discovered.
If you have had any of these thoughts and would like to know more about how to buy or sell a home in our current market, we would love to tell you about the many options available while being responsible to stay safe. Whether it is buying for the first time, moving up or moving on, I would like to help.
If you would like any professional residential Real Estate advice, contact us at Paramount Real Estate Services. 1008 12th St. SE Salem, OR 97302 503-851-1645
Also, to mobilize us right away to help you move, visit us here:
Real Estate Market Recovery
REALTORS Thoughts on the Recovery
The National Association of REALTORS® just released the Market Recovery Survey of a random sampling to close to 100,000 members conducted June 24-26, 2020. The following statements are the members’ opinion on various aspects of the recovery to the Covid-19 pandemic as it relates to real estate.
In response to the safety of buyers, sellers and agents, REALTORS® are expecting within the next year to have increased demand for the following technologies used to market properties:
- 67% – Zoom or other video technology to communicate with clients
- 66% – virtual tours
- 63% – live virtual tours conducted by agent using video
- 60% – virtual open houses
Nine out of ten respondents indicated that some of the buyers have returned to the market or never left the market. Agents currently working with buyers report that slightly more than half of buyer’s timeline has remained the same with about the same level of urgency. 27% believe the buyers have more urgency.
The most popular reason cited by buyers with an increased timeline is that the delay during the pandemic has amplified their demand for a new home. Others realize that new home features would make their home life more comfortable. Some buyers are wanting to buy before a potential second peak of Covid-19 occurs.
During the week the survey was taken, three out of four buyers saw the home in person physically while 26% did not.
Roughly 2/3 of the buyers are looking for the same features as they were prior to Covid-19 while new feature considerations include home office, space to accommodate family, larger home for more space, place to exercise and bigger kitchen.
Most buyers are looking for the same type home, however, respondents reported that 13% are moving away from multi-family properties to a single-family home and only 1% are going from SFH to multi-family.
89% of respondents stated that some of the sellers have returned to or never left the market. Only 23% reported more urgency to sell a home due to the pandemic.
On the commercial side, 2/3 of REALTOR® respondents felt like the demand for office space would decrease and 72% felt that retail space demand would decrease.
The stats mentioned in this article pertain nationwide, although ALL Real Estate is local.
If you would like any professional residential Real Estate advice, contact us at Paramount Real Estate Services. 1008 12th St. SE Salem, OR 97302 503-851-1645
Also, to mobilize us right away to help you move, visit us here: