Deducting (PMI) Private Mortgage Insurance in 2016, 2017, pmi mortgage insurance.#Pmi #mortgage #insurance


Deducting (PMI) Private Mortgage Insurance

Homeowners are usually well informed about the home-related tax deductions that they can make at filing time. However, when purchasing a home, other costs can quickly accumulate. For buyers who can t come up with a 20% down payment on the purchase price, they will have the added cost of private mortgage insurance (PMI).

The PMI is a policy that is taken out by the homebuyer to protect the lender against possible default on the mortgage loan.

Table of Contents

PMI is Now Tax DeductiblePmi mortgage insurance

This income tax deduction was developed as an element of the Tax Relief and Health Care Act of 2006 and initially added to private mortgage insurance (PMI) plans issued in 2007.

This tax break was extended by lawmakers because of the slow recovery of the housing market. It has been extended by Congress for premiums paid up to 2016.

The PMI deduction can be taken by policies issued by the Federal Housing Administration , Department of Agriculture s Rural Housing Service, Department of Veterans Affairs and even private insurers.

Counted as Interest

Since some property tax payments and mortgage interest exceed the regular deductions that can be claimed, a number of homeowners have to itemize their deductions.

You can find the PMI deduction in the Schedule A under the section Interest You Paid , which is on line 13.

How much PMI can you claim? The amount is shown in box 4 of Form 1098 what the lender sent in the alternate year-end mortgage details statement.

Time, Occupancy Restrictions

You should make sure you meet the requirements before you claim the PMI deduction.

Take note of when you sent in payment for the mortgage insurance. If you paid a PMI on your mortgage on or after January 1st 2007, the deduction is eligible. Prior to that date PMI deductions are not eligible.

Any new mortgages up to and including 2016 will qualify for the PMI deduction.

You will also qualify to get the PMI deduction if you refinanced your home after January 1st 2007. You should be careful how the refinance is structured though. The deduction applies to refinances up to the initial mortgage loan amount, not to any additional money you might get from the new refinanced mortgage.

Second home loans also qualify for the deduction of PMI payments. Similar to your primary home, the second home mortgage must have been issued after January 1st 2007 for the deductible to qualify.

The second property has to be for personal use, not rented. You will not be able to claim the PMI if the second property is rented. If your second home is rented you might be able to claim tax breaks as a rental property.

Income Phaseouts

To conclude, even though there isn t a statutory restriction on the total amount of PMI payments you are able to deduct, the amount could be lowered depending on your earnings.

The deduction will start being reduced once the homeowner s adjusted gross income (AGI), exceeds $100,000. This earnings restriction is valid if you are single, the household head or married and submitting together. The phaseout will start at $50,000 AGI for married couples filing taxes independently.

The PMI deduction is lowered by 10 % for every $1,000 a filer s earnings are over the AGI restriction. The deduction goes away entirely for the majority of property owners whose AGI is $109,000 or for married couples filing taxes separately $54,500.

The Schedule A directions consist of a work sheet, as does the majority of income tax preparation software programs, that property owners could utilize to figure out their lowered PMI deduction total.

Use TurboTax and Forget the Hassle

When you use TurboTax Online to prepare and file your taxes , you don’t need to know anything about PMI and other homeowner tax deductions. We’ll just ask you simple questions, fill in all the right forms, and do all the calculations for you.


Deducting (PMI) Private Mortgage Insurance in 2016, 2017, pmi mortgage insurance.#Pmi #mortgage #insurance


Deducting (PMI) Private Mortgage Insurance

Homeowners are usually well informed about the home-related tax deductions that they can make at filing time. However, when purchasing a home, other costs can quickly accumulate. For buyers who can t come up with a 20% down payment on the purchase price, they will have the added cost of private mortgage insurance (PMI).

The PMI is a policy that is taken out by the homebuyer to protect the lender against possible default on the mortgage loan.

Table of Contents

PMI is Now Tax DeductiblePmi mortgage insurance

This income tax deduction was developed as an element of the Tax Relief and Health Care Act of 2006 and initially added to private mortgage insurance (PMI) plans issued in 2007.

This tax break was extended by lawmakers because of the slow recovery of the housing market. It has been extended by Congress for premiums paid up to 2016.

The PMI deduction can be taken by policies issued by the Federal Housing Administration , Department of Agriculture s Rural Housing Service, Department of Veterans Affairs and even private insurers.

Counted as Interest

Since some property tax payments and mortgage interest exceed the regular deductions that can be claimed, a number of homeowners have to itemize their deductions.

You can find the PMI deduction in the Schedule A under the section Interest You Paid , which is on line 13.

How much PMI can you claim? The amount is shown in box 4 of Form 1098 what the lender sent in the alternate year-end mortgage details statement.

Time, Occupancy Restrictions

You should make sure you meet the requirements before you claim the PMI deduction.

Take note of when you sent in payment for the mortgage insurance. If you paid a PMI on your mortgage on or after January 1st 2007, the deduction is eligible. Prior to that date PMI deductions are not eligible.

Any new mortgages up to and including 2016 will qualify for the PMI deduction.

You will also qualify to get the PMI deduction if you refinanced your home after January 1st 2007. You should be careful how the refinance is structured though. The deduction applies to refinances up to the initial mortgage loan amount, not to any additional money you might get from the new refinanced mortgage.

Second home loans also qualify for the deduction of PMI payments. Similar to your primary home, the second home mortgage must have been issued after January 1st 2007 for the deductible to qualify.

The second property has to be for personal use, not rented. You will not be able to claim the PMI if the second property is rented. If your second home is rented you might be able to claim tax breaks as a rental property.

Income Phaseouts

To conclude, even though there isn t a statutory restriction on the total amount of PMI payments you are able to deduct, the amount could be lowered depending on your earnings.

The deduction will start being reduced once the homeowner s adjusted gross income (AGI), exceeds $100,000. This earnings restriction is valid if you are single, the household head or married and submitting together. The phaseout will start at $50,000 AGI for married couples filing taxes independently.

The PMI deduction is lowered by 10 % for every $1,000 a filer s earnings are over the AGI restriction. The deduction goes away entirely for the majority of property owners whose AGI is $109,000 or for married couples filing taxes separately $54,500.

The Schedule A directions consist of a work sheet, as does the majority of income tax preparation software programs, that property owners could utilize to figure out their lowered PMI deduction total.

Use TurboTax and Forget the Hassle

When you use TurboTax Online to prepare and file your taxes , you don’t need to know anything about PMI and other homeowner tax deductions. We’ll just ask you simple questions, fill in all the right forms, and do all the calculations for you.


5 Ways to Get a Loan Without Private Mortgage Insurance (PMI), pmi mortgage insurance.#Pmi #mortgage


How to Get a Loan Without Private Mortgage Insurance (PMI)

For many individuals and families who are looking at purchasing a home, or any other real estate, private mortgage insurance (PMI) can be a major cost factor. PMI is a requirement that comes into play if the buyer’s initial down payment is less than 20% of the purchase price. PMI is designed to guarantee the bank’s interest in the property in case the buyer is unable to keep up with the mortgage payments. Many banks advertise loans that only require low down payments, but the cost of PMI may be excessive. It is important to understand that there are several ways to avoid PMI.

Steps Edit

Method One of Five:

Making a Large Enough Down Payment Edit

Pmi mortgage insurance

Pmi mortgage insurance

Pmi mortgage insurance

Pmi mortgage insurance

Method Two of Five:

Using a Piggyback Loan Edit

Pmi mortgage insurance

Pmi mortgage insurance

Pmi mortgage insurance


PMI – What is Private Mortgage Insurance? #latest #mortgage #rates


#home mortgage insurance

#

Private Mortgage Insurance – What is PMI?

Private Mortgage Insurance – What is PMI?

What is PMI?

PMI, also known as private mortgage insurance, is a type of mortgage insurance from private insurance companies used with conventional loans. Similar to other kinds of mortgage insurance policies, PMI protects the lender if you stop making payments on your home loan. PMI can be arranged by the lender and provided by private insurance companies.

If you are required to pay private mortgage insurance, it typically makes up a portion of your monthly mortgage payment, in addition to your principal, interest, property tax, and homeowners insurance. Similar to interest, property tax, and homeowners insurance, payment of your PMI does not build equity in your home.

8 FAQs about PMI

Mortgage lenders make many borrowers who don t have 20% to put down on a home purchase private mortgage insurance (PMI) to protect the lender if the borrower is unable to pay the mortgage. In other words, PMI guarantees your lender will get paid if you are unable to pay your mortgage payments and you default on your loan. For the borrower, it has a benefit, too: Getting private mortgage insurance allows you to purchase a home before you have the full 20 percent of the home s value saved up for a down payment.

Here s a primer on what you need to know about private mortgage insurance:

1. What are the different types of PMI?

In general, there are two types of mortgage insurance: mortgage insurance bought from the government, designed for those with FHA loans (this is called mortgage insurance premiums or MIP) or private mortgage insurance for conventional loans which is bought from the private sector (this is called private mortgage insurance or PMI). MIP for FHA and VA loans is run differently and managed internally than private mortgage insurance, and they have their own set of rules.

Basically, the type of mortgage insurance required will depend on the type of mortgage loan you get.

2. Who is required to have PMI?

Typically on a conventional loan, if your down payment is less than 20 percent of the value of the home, lenders will require you to carry private mortgage insurance. Usually, you pay those mortgage insurance premiums until you have enough equity in your home to have a loan-to-value ratio (LTV) this is simply the amount of money you borrowed divided by the value of the property you bought of 80 percent.

For example, let s say you bought a home with a value of $100,000 and put a down payment of 10%, or $10,000, and got a $90,000 loan to pay the rest. Your LTV in this case would be $90,000 divided by $100,000, or 90 percent. The longer you pay down your mortgage, the lower your loan-to-value (LTV) will become. On government loans, mortgage insurance is normally required regardless of the LTV.

Need to talk to a lender? Find one on Zillow

3. How much does mortgage insurance cost?

Conventional mortgage insurance rates vary usually, the lower your down payment and/or the lower your credit score, the higher the premiums. The rate you receive for your private mortgage insurance will depend on your credit score, the amount of money you have for your down payment, and insurer. But typically the premiums for private mortgage insurance can range from $30-70 per month for every $100,000 borrowed. So, if you bought a home with a value of $300,000, you might pay about $150 per month for private mortgage insurance.

On FHA loans. there is an up-front MIP (mortgage insurance premium) and annual premium which is collected monthly.

4. When do I pay PMI premiums?

When you are required to pay your private mortgage insurance premium depends on your specific loan policy. But typically, paying your mortgage insurance premiums monthly happens right along with your mortgage payment for your current loan (you can just send one payment to the lender). Lenders may also have a policy that allows you to pay your PMI on a lump sum basis either in cash at closing or finance the premium in your loan amount.

5. Why do I need a PMI policy?

Private mortgage insurance minimizes the risk for lenders to offer loans to borrowers who don t have a 20% down payment and therefore have less equity in their homes once they are purchased. This equity would help pay the loan balance in the event you default and go into foreclosure.

Your lender requires you to have private mortgage insurance so that if you can no longer make payments on your home, the lender will still get paid (through the private insurance policy). PMI basically safeguards the lender in the event of borrower default. It does not protect you, the borrower, if you fall behind on your mortgage payment. If you fall behind on your payments, your credit score could suffer or you could lose your home through foreclosure.

6. How long do I need to have mortgage insurance?

You are typically required to pay a private mortgage insurance premium on a conventional loan for as many months or years it takes to build enough equity in your home to equal 20 percent of your home s value and have a loan-to-value ratio of 80 percent. For many homeowners with FHA loans, a mortgage insurance premium (MIP) is required for the life of the loan policy, which is up to 30 years. Again, MIP for an FHA loan is different than PMI on a conventional loan. Contact your lender if you have questions about the mortgage insurance premium on your FHA loan.

7. Can I avoid paying for mortgage insurance?

Typically, if you put down 20 percent or more when you buy a home, you can typically avoid paying for private mortgage insurance on a conventional loan (not an FHA loan). Otherwise, there are a few loan options that do not require mortgage insurance:

  • In 2016, Bank of America launched a partnership with Self-Help Ventures Fund and Freddie Mac for a new mortgage product called the Affordable Loan Solution mortgage. It s a conforming loan for low- and moderate-income home buyers that allows a down payment of 3% and does not require mortgage insurance.
  • Qualified veterans can apply for a VA loan that allows up to 100 percent financing (that s a $0 down payment) and does not require mortgage insurance. They may only require an upfront funding fee that certain veterans may be exempt from.
  • Some credit unions can waive private mortgage insurance on some loans for strong applicants.
  • Some lenders offer non-conforming and portfolio options that accept down payments as little as 10-15% and do not require PMI.
  • Physician loans typically do not require PMI if the down payment is less than 20%.

Another option to avoid paying PMI, referred to as piggybacking, is taking out a smaller loan for enough money to cover the 20% down payment so that you can avoid paying private mortgage insurance. The downside here is that the smaller loan will typically have a higher interest rate than the interest rate on the mortgage loan. But you can typically deduct the interest on our federal tax return. You will also need to consider whether you can afford to pay a second loan for a set number of years in addition to your mortgage payment. Contact your tax adviser or financial planner for more info.

Check today’s mortgage rates on Zillow

If you are paying PMI on a conventional loan, you can request to cancel it (see below) once you ve built up enough equity in your home. To stop paying your mortgage insurance policy on an FHA loan, you can refinance to a conventional loan once you have enough equity in your home. You ll also want to make sure your credit score is high enough to qualify, and that interest rates make financial sense for you. Contact your lender if you have questions about the mortgage insurance on your FHA loan.

8. When does mortgage insurance “fall off” the loan?

Once the borrower has built up a certain amount of equity in the house, typically 20% equity, private mortgage insurance usually may be canceled which will reduce your mortgage payment and allow you pay less money every month. The lender usually won t automatically cancel PMI until you ve reached 22 percent equity based on the original appraised value of the home, or unless you contact them to request cancellation at 20 percent of the current market value. So if you own a home with a value of $100,000 and have paid down $20,000 in principal, you can request to cancel your PMI. Be sure to contact your lender once you ve hit 20 percent equity.


What is Mortgage Insurance, PMI, MI, First Mortgage, MA #best #mortgage #rate


#pmi mortgage insurance

#

What is Mortgage Insurance?

Learn about private mortgage insurance, PMI or MI.

Most home buyers need a mortgage loan to realize homeownership; however, to secure a mortgage loan lenders typically require borrower’s to make a minimum 20 percent down payment. This is one of the largest hurdles for home buyers, particularly first-time home buyers.

Many home buyers simply cannot afford a 20 percent down payment.

In order to resolve this issue, most lenders will allow a borrower to make a down payment of less than 20 percent, as long as the borrower purchases private mortgage insurance (PMI), also known as lender’s mortgage insurance (LMI) or, simply, mortgage insurance (MI). Many borrowers are unaware of PMI requirements and costs.

When a borrower is unable to make a 20 percent down payment, he is considered more likely to default on a mortgage loan. This, of course, puts his or her lender at a higher risk of losing money. This is where mortgage insurance enters the loan process. Mortgage insurance protects the lender in the case of borrower default. If a borrower defaults and his or her lender is unable to recover its costs after the foreclosure and sale of the property, the mortgage insurer provides money, payable to the lender only, to recoup losses.

Standard mortgage insurance does not provide any protection for the borrower. Whether or not a lender recovers its losses through collection on a mortgage insurance policy, the borrower is held fully responsible for his default in Massachusetts. Many borrowers do not understand this, because they confuse mortgage insurance with mortgage protection insurance. These are completely different types of insurance. Mortgage protection insurance does protect the borrower in the case of job loss, disability and/or death depending on the policy, but mortgage insurance, commonly referred to as PMI, MI and LMI, does not.

Although mortgage insurance does not protect borrowers, it still benefits them. Since PMI allows home buyers to make a down payment of less than 20 percent, they can realize homeownership sooner with less upfront costs. Since, however, it is the borrower’s higher risk of default that triggers the need for mortgage insurance, it is typically the borrower who pays the PMI premium.

Mortgage insurance rates vary based on the mortgage amount, loan terms, down payment size, borrower credit score, and other factors. Typical PMI rates are $40-50 monthly per $100,000 borrowed. These premiums may be paid upfront, incorporated into the loan, or part may be paid upfront with the remainder being rolled into mortgage payments. Some mortgage insurance providers, namely those insuring state and federally-backed loans, do offer discounts to borrowers with more modest incomes, but requirements vary.

Fortunately mortgage insurance does not last the life of the loan. It is only required until the loan’s principal reaches 80 percent, which is what the principle would have been originally had there been a 20 percent down payment. This can occur due to the loan being paid down, the value of the home increasing, or both.

Thanks to the US Homeowners Protection Act of 1998, lenders are required to cancel borrower-paid mortgage insurance when the loan is scheduled to reach 78 percent of the original appraised value or sales price, whichever is less. This means a borrower typically needs 22 percent equity in his home in order to have his PMI automatically cancelled. In addition the act gives borrowers the right to request that their lender cancel the PMI when they reach 20 percent equity in their mortgage. Liens and defaults, however, may require further PMI despite these thresholds being reached. Still, in order for a mortgage insurance policy to be officially cancelled, it is the servicer of the mortgage loan who must submit a cancellation request to the mortgage insurer. Before doing this most servicers will conduct a new property appraisal to confirm the borrower has reached 20 percent equity.

Those who seek to avoid mortgage insurance have two main choices: come up with a 20 percent down payment or take out a second mortgage, also known as a piggy-back loan or an 80-10-10 mortgage. This loan bridges the gap between the borrower’s down payment and the requisite 20 percent. These loans are attractive because they allow money to go toward the home’s equity rather than PMI premiums, and they are partially tax deductible. Second mortgages can be more costly than PMI premiums because they tend to have higher interest rates and are often subject to payment increases. Borrowers typically choose second mortgage or piggy-back loan in order to reduce their overall monthly housing payments.

Since mortgage insurance became tax-deductable in 2007, PMI is usually the least expensive option for low-down payment borrowers. It should be noted that Congress extends the PMI tax break on a yearly basis, thus future deductions are not guaranteed (consult a tax professional). Under the current deduction terms, those making under $100,000 per year have an unlimited deduction amount for PMI. Borrowers earning more than $100,000 per year must reduce their deduction by 10 percent for every $1,000 they make over the $100,000 mark. As a result those making over $109,000, gross adjusted income, are not allowed a PMI tax deduction.

Home buyers who plan to secure a mortgage with a down payment of less than 20 percent, should keep PMI and its costs in mind. When searching for a mortgage lender and negotiating home price, it is important to consult a mortgage professionals who is familiar with the lending process and a buyer agent who is experienced in the home-buying process.

Home Buyer Testimonials

Client. Kailee C.
“I really valued the level of professionalism and reliability that [he] consistently maintained. Further, I appreciated the timely manner in which he responded to my questions. “

Client. Oksana P.
“No pressure approach made the process much easier. in spite of an agressive moving timeline.”

Client. Geneva R.
“The service Buyers Brokers Only, LLC provided was truly invaluable to us in finding our first home. We couldn’t be happier!”

Client. Mark V. Laura V.
“It was an absolute pleasure to work with. Buyers Brokers Only, LLC. There is absolutely no reason to use anyone else. “

The Latest Home Listings


PMI – What is Private Mortgage Insurance? #home #refinance #loans


#home mortgage insurance

#

Private Mortgage Insurance – What is PMI?

Private Mortgage Insurance – What is PMI?

What is PMI?

PMI, also known as private mortgage insurance, is a type of mortgage insurance from private insurance companies used with conventional loans. Similar to other kinds of mortgage insurance policies, PMI protects the lender if you stop making payments on your home loan. PMI can be arranged by the lender and provided by private insurance companies.

If you are required to pay private mortgage insurance, it typically makes up a portion of your monthly mortgage payment, in addition to your principal, interest, property tax, and homeowners insurance. Similar to interest, property tax, and homeowners insurance, payment of your PMI does not build equity in your home.

8 FAQs about PMI

Mortgage lenders make many borrowers who don t have 20% to put down on a home purchase private mortgage insurance (PMI) to protect the lender if the borrower is unable to pay the mortgage. In other words, PMI guarantees your lender will get paid if you are unable to pay your mortgage payments and you default on your loan. For the borrower, it has a benefit, too: Getting private mortgage insurance allows you to purchase a home before you have the full 20 percent of the home s value saved up for a down payment.

Here s a primer on what you need to know about private mortgage insurance:

1. What are the different types of PMI?

In general, there are two types of mortgage insurance: mortgage insurance bought from the government, designed for those with FHA loans (this is called mortgage insurance premiums or MIP) or private mortgage insurance for conventional loans which is bought from the private sector (this is called private mortgage insurance or PMI). MIP for FHA and VA loans is run differently and managed internally than private mortgage insurance, and they have their own set of rules.

Basically, the type of mortgage insurance required will depend on the type of mortgage loan you get.

2. Who is required to have PMI?

Typically on a conventional loan, if your down payment is less than 20 percent of the value of the home, lenders will require you to carry private mortgage insurance. Usually, you pay those mortgage insurance premiums until you have enough equity in your home to have a loan-to-value ratio (LTV) this is simply the amount of money you borrowed divided by the value of the property you bought of 80 percent.

For example, let s say you bought a home with a value of $100,000 and put a down payment of 10%, or $10,000, and got a $90,000 loan to pay the rest. Your LTV in this case would be $90,000 divided by $100,000, or 90 percent. The longer you pay down your mortgage, the lower your loan-to-value (LTV) will become. On government loans, mortgage insurance is normally required regardless of the LTV.

Need to talk to a lender? Find one on Zillow

3. How much does mortgage insurance cost?

Conventional mortgage insurance rates vary usually, the lower your down payment and/or the lower your credit score, the higher the premiums. The rate you receive for your private mortgage insurance will depend on your credit score, the amount of money you have for your down payment, and insurer. But typically the premiums for private mortgage insurance can range from $30-70 per month for every $100,000 borrowed. So, if you bought a home with a value of $300,000, you might pay about $150 per month for private mortgage insurance.

On FHA loans. there is an up-front MIP (mortgage insurance premium) and annual premium which is collected monthly.

4. When do I pay PMI premiums?

When you are required to pay your private mortgage insurance premium depends on your specific loan policy. But typically, paying your mortgage insurance premiums monthly happens right along with your mortgage payment for your current loan (you can just send one payment to the lender). Lenders may also have a policy that allows you to pay your PMI on a lump sum basis either in cash at closing or finance the premium in your loan amount.

5. Why do I need a PMI policy?

Private mortgage insurance minimizes the risk for lenders to offer loans to borrowers who don t have a 20% down payment and therefore have less equity in their homes once they are purchased. This equity would help pay the loan balance in the event you default and go into foreclosure.

Your lender requires you to have private mortgage insurance so that if you can no longer make payments on your home, the lender will still get paid (through the private insurance policy). PMI basically safeguards the lender in the event of borrower default. It does not protect you, the borrower, if you fall behind on your mortgage payment. If you fall behind on your payments, your credit score could suffer or you could lose your home through foreclosure.

6. How long do I need to have mortgage insurance?

You are typically required to pay a private mortgage insurance premium on a conventional loan for as many months or years it takes to build enough equity in your home to equal 20 percent of your home s value and have a loan-to-value ratio of 80 percent. For many homeowners with FHA loans, a mortgage insurance premium (MIP) is required for the life of the loan policy, which is up to 30 years. Again, MIP for an FHA loan is different than PMI on a conventional loan. Contact your lender if you have questions about the mortgage insurance premium on your FHA loan.

7. Can I avoid paying for mortgage insurance?

Typically, if you put down 20 percent or more when you buy a home, you can typically avoid paying for private mortgage insurance on a conventional loan (not an FHA loan). Otherwise, there are a few loan options that do not require mortgage insurance:

  • In 2016, Bank of America launched a partnership with Self-Help Ventures Fund and Freddie Mac for a new mortgage product called the Affordable Loan Solution mortgage. It s a conforming loan for low- and moderate-income home buyers that allows a down payment of 3% and does not require mortgage insurance.
  • Qualified veterans can apply for a VA loan that allows up to 100 percent financing (that s a $0 down payment) and does not require mortgage insurance. They may only require an upfront funding fee that certain veterans may be exempt from.
  • Some credit unions can waive private mortgage insurance on some loans for strong applicants.
  • Some lenders offer non-conforming and portfolio options that accept down payments as little as 10-15% and do not require PMI.
  • Physician loans typically do not require PMI if the down payment is less than 20%.

Another option to avoid paying PMI, referred to as piggybacking, is taking out a smaller loan for enough money to cover the 20% down payment so that you can avoid paying private mortgage insurance. The downside here is that the smaller loan will typically have a higher interest rate than the interest rate on the mortgage loan. But you can typically deduct the interest on our federal tax return. You will also need to consider whether you can afford to pay a second loan for a set number of years in addition to your mortgage payment. Contact your tax adviser or financial planner for more info.

Check today’s mortgage rates on Zillow

If you are paying PMI on a conventional loan, you can request to cancel it (see below) once you ve built up enough equity in your home. To stop paying your mortgage insurance policy on an FHA loan, you can refinance to a conventional loan once you have enough equity in your home. You ll also want to make sure your credit score is high enough to qualify, and that interest rates make financial sense for you. Contact your lender if you have questions about the mortgage insurance on your FHA loan.

8. When does mortgage insurance “fall off” the loan?

Once the borrower has built up a certain amount of equity in the house, typically 20% equity, private mortgage insurance usually may be canceled which will reduce your mortgage payment and allow you pay less money every month. The lender usually won t automatically cancel PMI until you ve reached 22 percent equity based on the original appraised value of the home, or unless you contact them to request cancellation at 20 percent of the current market value. So if you own a home with a value of $100,000 and have paid down $20,000 in principal, you can request to cancel your PMI. Be sure to contact your lender once you ve hit 20 percent equity.


Mortgage Payment Calculator (Taxes, Insurance – PMI) #mortgage #intrest #rates


#house payment calculator with taxes

#

Mortgage Payment Calculator Help

This mortgage payment calculator will help you determine the cost of homeownership at today’s mortgage rates. accounting for principal, interest, taxes, homeowners insurance, and, where applicable, condominium association fees. The default values of the mortgage calculator, including mortgage rate and length of loan, can be easily adjusted to reflect your current situation.

You can use the mortgage payment calculator in three ways. (1) You can use it to find the monthly mortgage payment of a home, given current mortgage rates and a specific home purchase price; (2) You can use it to find your maximum home purchase price given your annual household income; and (3) You can use it to determine your maximum home purchase price given a specific monthly budget for housing.

Home Price

Home price is the dollar amount for which the home can be purchased. This is not the same as “listing price”, which is the amount for which the home is listed for sale. Home price does not include closing costs and loan fees. It’s the contractually-agreed upon price for a home.

Interest Rate

Your interest rate is the rate at which you will repay the bank for your mortgage. Interest rates are expressed in annual terms. With fixed-rate mortgages, your mortgage interest rate will remain unchanged for the life of the loan. With adjustable-rate mortgage, your interest rate may change after a fixed number of years. When using this home mortgage calculator, use today’s mortgage rate for “interest rate”.

Length Of The Loan

Sometimes known as “loan term”, the length of the loan is the number of years until the loan is paid in-full. Most mortgages have a loan term of 30 years. Since 2010, the 20-year and 15-year fixed rate mortgage have been increasingly common. The monthly cost of a mortgage is higher with a shorter-term loan, but less mortgage interest is paid over time. Homeowners with a 15-year mortgage will pay approximately 65% less mortgage interest as compared to a homeowner with a 30-year loan.

Down Payment

A downpayment is the amount of equity that you put into the house at the time of purchase. For example, if you are buying a home for $100,000 and you make a $5,000 downpayment, you will have $5,000 equity (5%) in your new home. Some mortgage programs, such as the FHA loan. require a 3.5% downpayment; while others, including the VA loan and USDA loan, require no downpayment whatsoever. Your downpayment may not be the only cash required at closing so be sure to budget for closing costs and other items.

Homeowners Insurance

Homeowners insurance is an insurance policy against your home which protects against minor, major, and catastrophic loss. Sometimes called “hazard insurance”, all homeowners are required to carry such protection. Laws vary by state but, as a general rule, your homeowners insurance policy must be in an amount which covers the cost to rebuild your home as-is. Homeowners insurance costs vary by zip code and insurer. Homeowners insurance should not be confused with private mortgage insurance, which is something else entirely. Along with property taxes, homeowners insurance can be paid in equal installments along with your monthly mortgage payment. This arrangement is known as “escrowing” your taxes and insurance.

Property Taxes

Property taxes are taxes assessed on a home, and paid to your state, city, and/or local government(s). Property taxes can range in cost from one-half percent of your home’s value, to two percent of its value or more on an annual basis. Sometimes called “real estate taxes”, property taxes are typically billed twice annually. Along with homeowners insurance, property taxes can be paid in equal installments along with your monthly mortgage payment. This arrangement is known as “escrowing ” your taxes and insurance.

Homeowners Association (HOA) Dues

Homeowners Association dues are typically paid by condominium owners and homeowners in a planned urban development (PUD) or town home. HOA dues are paid monthly, semi-annually, or annually; and, are paid separately to a management company or governing body for the association. HOA dues cover common services for tenants and residents. These services may include landscaping, elevator maintenance, maintenance and upkeep, and legal costs. Homeowners association dues vary by building and neighborhood.

Mortgage Insurance (PMI)

Mortgage insurance is a monthly payment which is paid by the homeowner for the benefit of the lender. Mortgage insurance “pays out” when a loan goes into default. Payments are made to the lender. Mortgage insurance is required for conventional loans via Fannie Mae and Freddie Mac for which the downpayment is twenty percent or less. This type of mortgage insurance is known as Private Mortgage Insurance (PMI). Other loan types require mortgage insurance, too, including USDA loans and FHA loans. With FHA loans and USDA loans, mortgage insurance is called Mortgage Insurance Premiums (MIP). Mortgage insurance is sometimes paid upfront (UFMIP) or as a single-premium; and is sometimes lender-paid (LPMI).

Annual Income

Annual income is the amount of documented income you earn each year. Income can be earned in many forms including W-2 income, 1099 income, K-1 distributions, social security income, pension income, and child support and alimony. Non-reported income cannot be used for qualifying purposes on a mortgage. When using the mortgage calculator, use pre-tax income.

Monthly Debts

Monthly debts are recurring payments, due monthly. Monthly debts may include auto leases, auto loans, student loans, child support and alimony payments, installment loans, and credit card payments. Note, though, that your monthly obligation on a credit card is its minimum payment due and not your total balance owed. For credit cards with no minimum payment due, use five percent (5%) of your balance owed as your minimum payment due.

Debt-To-Income Ratio

Debt-to-Income Ratio (DTI) is a lender term used to determine home affordability. The ratio is determined by dividing the sum of your monthly debts into your verifiable monthly income. In general, mortgage approvals require a debt-to-income of 45% or less, although lenders will sometimes allow for an exception. Note that carrying a DTI of 45% may not be advisable. A high DTI commits much of your household income to housing payments.

Monthly Payment

Your monthly payment is your monthly obligation on your home. This includes your mortgage payment, plus homeowners association dues (HOA), where applicable. Your monthly payment will change over time because its components will change over time. Your real estate tax bill will change annually, as will the premium on your homeowners insurance policy. Homeowners with a adjustable-rate mortgage can expect for their mortgage payment to change, too, after the loan’s initial fixed period ends.

Amortization

Amortization (pronounced ah-more-tih-ZAY-shun ) is the schedule by which a mortgage loan is repaid to a bank. Amortization schedules vary by loan term, such that a 30-year mortgage will repay at a different pace than a 15-year mortgage or a 20-year one. In the early years of a loan, traditional mortgage amortization schedules are comprised of a high percentage of mortgage interest and a low percentage of principal repayment. In the later years of a loan, the percentage of mortgage interest drops and the percentage of principal repayment increases. As an example, at today’s mortgage rates, in the first year of a loan, a 15-year mortgage payment is comprised of 38% interest and 62% principal. A 30-year mortgage is 72% interest and 28% principal. The 30-year loan payment will not be meet the 38/62 ratio until its 18th year.

Principal

Principal is the amount borrowed from the bank. In portions, principal is repaid to the bank each month as part of the overall mortgage payment. The portion of principal in each payment increases monthly until the loan is paid in full, which may be in 15 years, 20 years, or 30 years. Paying principal each month increases your home equity, assuming that your home’s value is unchanged. If your home’s value drops, your equity percentage will decrease in spite of reducing your loan’s balance. Similarly, if your home’s value rises, your equity percentage will increase by an amount greater than what you’ve paid in principal.

Interest

Interest is the amount you pay the bank for the privilege of borrowing for your home. Interest payments are paid monthly, until the loan is paid in full. The portion of interest paid to the bank each month decreases according to your loan’s amortization schedule. Your mortgage interest paid over the life of your loan is based on your loan term and your mortgage interest rate.


Obama Cuts FHA Mortgage Insurance (PMI) for FHA Streamlines #loan #rates


#streamline mortgage

#

FHA Streamline Refinance Rates Continue to drop

FHA Streamline Refinance Rates continue to drop. FHA Streamline is a Refinance Program that lets FHA borrowers streamline refinance with no appraisal, no income, no points. There has never been a better time to FHA Streamline Refinance your Home and save money. So say you’re upside down? That’s ok. Say you’ve taken a pay cut at your Job and don’t make enough money to qualify for a FHA Streamline refinance? That’s ok. Say you don’t want to spend money on closing cost with FHA Streamline Refinance? That’s ok. As a matter of fact, FHA Streamline Refinances can also be considered as cash out deals Once you close the loan you get skip a payment or two and get your escrow balance back from your current lender. It streamlines the FHA refinance process like no other type of refinance. The new Obama FHA Streamline refinance Program is supposed to help at least 3-4 million FHA borrowers and is literally going to save FHA borrowers a ton of money. If you have an FHA Loan, The time to streamline is now!

Streamline-FHA.com is not a mortgage lender and does not provide mortgage loans. Streamline-FHA.com is not a government sponsored website. Streamline-FHA.com matches consumers with companies that offer mortgage loan services. Once you have completed this expression of interest (or information request form) your information will be sent to our participating service providers, who may contact you by telephone and/or email. By submitting your expression of interest you are consenting to receive telephone calls from our service providers, even if you have previously listed yourself on any internal company, state or federal Do-Not-Call List. Rates are based on FHA 3 Year ARM 410K Loan amount 796 credit score and 60% LTV. The rate advertised may have points associated with it. The savings are based on borrowers that qualify for the new streamline program.


Private Mortgage Insurance (PMI) #mortgage #qualification #calculator


#mortgage insurance rates

#

Private Mortgage Insurance (PMI)

Indicates revision since last update.

If you have less than a 20% down payment when you purchase a home, you most likely will be required to purchase private mortgage insurance or PMI. PMI protects the lender on a conventional mortgage in the event the borrower defaults and the lender forecloses on the property. The premium for PMI is paid by the borrower and may be canceled once certain conditions are met. There are other variations of this type of insurance that may not be canceled if the mortgage is backed by the Federal Housing Administration (FHA) or the Department of Veterans Administration (VA).

Your lender is required to notify you on an annual basis that it is possible to cancel PMI. This notification is often included with the information regarding the amount of interest you paid on the mortgage and the disbursements from your escrow account. There should be an address and telephone number to contact the lender along with the toll free number 1.800.252.3439 for the Texas Department of Insurance (TDI). The lender is your best source for details regarding what is necessary to cancel PMI. TDI does not maintain mortgage information.

The cost of PMI can be anywhere from of 1% to almost 6% of the principal amount of the loan depending upon the down payment, the type of loan (fixed or adjustable interest rate), and term of the loan, as well as borrower’s credit score(s).

Two different laws regarding the cancellation of PMI are:

  1. Texas Insurance Code, 3502.201 – 3502.203 – Lender Powers and Duties (formerly Article 21.50, Sec. 1B), which is applicable to conventional mortgages effective prior to July 29, 1999; and
  2. The federal Homeowners Protection Act of 1998 – US Code, Title 12 – Chapter 49 ( 4901-4910 ) which is applicable to some mortgages effective July 29, 1999 or later.

Conventional Mortgages Prior to July 29, 1999

For a conventional mortgage that was effective prior to July 29, 1999. and has not been refinanced, Texas Insurance Code, 3502.201 – 3502.203 (formerly Article 21.50, Sec. 1B) requires:

(a) A lender that requires a borrower to purchase mortgage guaranty insurance shall provide annually to the borrower a copy of the following written notice printed in at least 10-point bold-face type:
“NOTICE OF RIGHT TO CANCEL PRIVATE MORTGAGE INSURANCE: If you currently pay private mortgage insurance premiums, you may have the right to cancel the insurance and cease paying premiums. This would permit you to make a lower total monthly mortgage payment and to possibly receive a refund of any unearned premiums on the policy. In most cases, you have the right to cancel private mortgage insurance if the principal balance of your loan is 80 percent or less of the current fair market appraised value of your home. If you want to learn whether you are eligible to cancel this insurance, please contact us at (address and telephone number of lender) or the Texas Department of Insurance consumer help line at (the appropriate toll-free telephone number).”

As noted above, in most cases borrowers have the right to cancel private mortgage insurance if the principal balance of your loan is 80 percent or less of the current fair market appraised value of your home. However, many lenders now seek having the principal balance reduced to 78% (rather than 80%), which has been suggested by Fannie Mae if you reside in the home, and from 65 to 70% for rental property. An appraisal will probably be required to cancel PMI. You may want to consider the valuation of similar properties in your neighborhood before expending the cost for a professional appraisal. Contact your lender first to determine what is required.

Conventional Mortgages on or After July 29, 1999

Conventional mortgages effective July 29, 1999 or later are subject to the Homeowners Protection Act of 1998 (Act) which contains the following definitions:

There are provisions regarding an automatic “termination date” based solely on the amortization schedule for the mortgage. According to the amortization schedule, termination of the PMI would occur when the principle balance of the mortgage, irrespective of the outstanding balance, is first scheduled to reach 78% of the original value of the property securing the loan. An exception to this would be for a high risk loan (as described in Chapter 49, Sec. 4902, (g) ) where the principal must be reduced to 77% of the original value.

An option is also available for a “cancellation date” when the amortization schedule reaches 80% or the principal is paid down to 80% of the original value. You should obtain a copy of the amortization schedule from the lender, if this was not provided at closing.

Additional information regarding termination of private mortgage insurance can be found at http://uscode.house.gov Title 12 – Chapter 49.

Complaints

Complaints regarding the lender refusing to have the insurance company cancel PMI after the required criteria has been met should be directed to the appropriate regulatory agency. The Texas Department of Banking regulates state banks, and has an excellent Regulator Referral List which can be found on its website at www.dob.texas.gov. Click on the ” Consumer Assistance “. If your complaint does not involve a state bank, click on ” Entities Not Supervised “. Included on this list is the Texas Office of the Attorney General, Consumer Protection Division, in case you are unable to determine who to contact.

For mortgages obtained through the Farm Credit System, please contact the Farm Credit Administration at www.fca.gov and then select “Borrowers Rights”.

For more information contact:

Last updated: 03/03/2016

Contact Information and Other Helpful Links


Private Mortgage Insurance – PMI Definition #home #equity #loans


#pmi mortgage insurance

#

Private Mortgage Insurance – PMI

What is a ‘Private Mortgage Insurance – PMI’

A risk-management product that protects lenders against loss if a borrower defaults. Most lenders require private mortgage insurance (PMI) for loans with loan-to-value (LTV) percentages in excess of 80% (the buyer put down less than 20% of the home’s value upon purchase). This allows borrowers to make a smaller down payment of 3% to 19.99%, instead of 20%, allowing them to obtain a mortgage sooner since they don’t have to save up as much money. Borrowers pay their PMI monthly until they have accumulated enough equity in the home that the lender no longer considers them high risk.

VIDEO

Loading the player.

BREAKING DOWN ‘Private Mortgage Insurance – PMI’

PMI only applies to conventional loans. Federal Housing Administration loans have their own mortgage insurance with different requirements, while Veterans Administration loans don’t require any mortgage insurance despite allowing 0% down payments.

PMI costs about 0.25% to 2% of your loan balance per year, depending on your down payment, loan term and credit score. The greater your risk factors, the higher the rate you pay. Also, because PMI is a percentage of the loan amount, the more you borrow, the more PMI you’ll pay. There are six major PMI companies in the United States. They charge similar rates, which are adjusted annually.

Keep track of your payments on the mortgage’s principal. When you reach 20% equity, you can notify the lender in writing that it is time to discontinue the PMI premiums. Lenders are required give the buyer a written statement at closing notifying them how many years and months it will take for them to pay 20% of the principal. You can also request PMI cancelation if your equity grows to 20% due to home-price appreciation or because you’ve made additional principal payments. The lender should comply as long as your home’s value hasn’t dropped, you have a history of on-time payments and you don’t have a second mortgage .

Once your down payment, plus the principal you’ve paid off, equals 22% of the home’s purchase price. the lender must automatically cancel PMI as required by the federal Homeowners Protection Act. even if your home’s market value has gone down (as long as you’re current on your mortgage).