Michigan Real Estate Purchase: Mortgage Insurance and WTF is this PMI?

We all hate it…but few of us know what it is. First, the insurance I am talking about is different than what you would get from AAA, which is home owner's insurance. A lot of first time buyers get that confused.

It is very similar though, except instead of you insuring your home, the lender is insuring its money. When you get a loan, if you put less than 20% as a down payment, the lender requires you to pay an insurance premium on this 20% that they are lending you. This is strictly for your lender and it is insurance for them in case you do not pay them back...the 20% would be covered on the insurance that you pay each month for them as a part of your mortgage payment. It is basically a penalty for not putting down the “standard” down payment amount. If you look at the bottom of the GFE your loan officer provides you, it breaks down the payment and what goes where. You will see “mtg. insurance” and the monthly affect on your payment.

Unfortunately, if you are putting less than 20% down, there are very few options to get rid of the mortgage insurance, but there are options. If you were to obtain your financing from the USDA Rural Development program, there is no monthly mortgage insurance. Some lenders offer a mortgage insurance buyout by charging an upfront fee, but there is little difference in saving.

For more in-depth help or answers, go to our website:
www.iconmortgagelending.com
Labels:

Comments

Post a Comment

Popular posts from this blog

Michigan Real Estate Purchase: The Deadly Repair Escrow

Bum Bum Buummm. Enter scary music and cold sweats, you just fell in love with a home that has a broken furnace and a big orange stain where a bathtub used to be. Chances are your financing is going to resemble that orange gunk on the tile right? There are options. With conventional financing, yes you will be sunk. The bank will only want a safe asset to secure. There are some programs that allow flexibility here like HomePossible, but it is very impractical. The good news is, that with the foreclosure boom, came the need to repair existing homes as production of new homes slowed to a crawl. Government financing fills the void of sensible repair financing. Actually it filled a long time ago before the housing boom started and home construction grew out of control. With FHA there is a possibility for a repair escrow; however the repairs must be minimal. The better option is the 203k loan that will allow a closing to take place like normal but provide you with money for all sorts of repa
Read more

First Time Home Buyers: Or, How the Newbie Gets Stymied

So, you want to buy a home, but with so much new to you it can become a whirlwind of confusion and indecision. That’s why I bring you this vastly important blog about the mental aspect and general overview of being a first time home buyer. First, don’t panic. Listen to the people and professionals around you, filter it through your own common sense, and believe in yourself. I want to own a home so much that I won’t: Listen, much like dealing with yet another embarrassing season from the Lions…you will go through many emotional stages when buying a home ranging from: “we’re only 0 and 4 and still in the hunt,” to, “WHY DID THEY SIGNED CULPEPPER?” This translates into your situation as, “We can get so much for so little,” to, “EVERYTHING IS TOO EXPENSIVE.” The most important things to realize are the same lessons that thousands of Americans learned when the housing bubble burst. It’s not a house; it’s a home. It’s not a status symbol; it’s where you build your future. And, it’s not a
Read more

Michigan First Time Home Buyers: Preparing Your Documents

I find that the first hurdle a First Time Buyer faces is getting their paperwork together. I am not sure why, but honestly this simple task dissuades many people when they start to apply. Perhaps following this list and having it ready at the outset will help the process seem smoother. Last two years of W-2s or Tax Returns. If you can’t find them, you can always contact your employer, your tax preparer, or the IRS for a copy. Most recent month of pay stubs. 1 month worth…the most recent available. Most recent 2 Months of bank statements. If you don’t get paper statements, you can print your online statements, but you will need to take them to your bank to get verified and stamped. Most recent 401k statement. (If you have one.) Copy of your driver’s license and social security card. The Patriot Act requires us to check these. Have these items ready to go before you look for a loan officer and DO NOT trust anyone that will try to quote you a payment or interest rate before they even see
Read more