Mortgage Insurance Details For Southern California Properties


Mortgage insurance (MI) is typically required by mortgage providers to protect them from losses if a borrower fails to pay their loan. When the lender attempts to relinquish a house, they are usually not able to to obtain the full amount remaining, so the purpose of insurance is to cover the loss. MI applies when home owners are financing greater than eighty-percent of the sale price of the home. There is generally a lump sum premium due at settlement and recurring fees calculated from a percentage of the amount of the loan. Mortgage insurance details for Southern California properties and recommendations on getting rid of MI fees are offered below.

Impact of MI on Monthly Payments

Mortgage insurance fees vary depending on the mortgage program. Home owners should consult with a loan officer to receive sample rates and analyze the impact that it will have on recurring mortgage payments. Rates may also change at times, so be sure to obtain current figures when you are starting the process of buying a home. Once you obtain a mortgage, the mortgage insurance amount for that specific mortgage will be the same for the life of that mortgage. With certain programs, you may receive a refund of a portion of the up-front MI charged if you pay off the loan within a certain time frame.

Recommendations On Getting Rid Of MI Fees

Recurring MI payments will usually be removed when the mortgage is paid down to 78% of the beginning property value. In an improving real estate market, you can also order an updated appraisal (from a company approved by the lender) to confirm that the price of the property has grown and that you have therefore achieved the 78% mark earlier than expected. There may be exceptions, so review your loan documents for information.

Mortgage Insurance Details For Southern California Properties

Most borrowers are not able to provide a 20% down payment and subsequently cannot avoid mortgage insurance. By understanding how MI is handled and ways to remove it sooner, home buyers may avoid paying more MI than needed. Our hope is that you found the above information on Mortgage Insurance Details For Southern California Properties useful and can use the recommendations on getting rid of MI fees. For additional details on this and related topics, contact Matthew Rapoport at Homes, Inc.