Mortgage insurance (MI) is a policy mandated by mortgage companies to protect them from losses if a property owner defaults on their mortgage. When the mortgage company goes to sell a property, they are unlikely to regain the full amount owed on the mortgage. MI applies to first mortgages where the property buyers are obtaining higher than 80% of the value of the property. There is ordinarily an up-front MI fee due at closing and monthly fees based on a percentage of the initial loan balance. Newburyport MA mortgage MI definition and tips on eliminating MI are detailed below.
MI percentages differ based on the type of loan. Home owners should ask a mortgage professional to obtain sample calculations and evaluate the impact that it will have on monthly 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 obtain a loan, the MI rate for that particular loan 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.
Tips on Eliminating MI
Recurring MI charges will normally disappear when the mortgage is paid down to 80% of the original home value. Most mortgage companies allow removal of MI a few percentages earlier if prompted by the homeowner when that percentage mark is reached. Check your closing paperwork for the percentages that apply to your mortgage. In an increasing real estate market, homeowners can also obtain a new appraisal (from a company approved by the bank) to demonstrate that the value of the home has increased and that you may have therefore reached the 80% mark earlier than expected.
Newburyport MA Mortgage MI Definition and Help
Most home buyers are unable to provide a 20% down payment and therefore cannot avoid MI. By knowing how MI works and how to eliminate it, home buyers can avoid paying more MI than needed. We hope that you found this Newburyport MA mortgage MI definition useful and will be able to use the tips on eliminating MI. For additional information on this and other related topics, contact John Wells at Wellsco Realty by calling 978-518-1481 or emailing firstname.lastname@example.org.