Mortgage Protection Insurance Offers Limited Benefits, private mortgage insurance.#Private #mortgage #insurance


Mortgage protection insurance offers limited benefits

Private mortgage insurance Private mortgage insurance Private mortgage insurance Private mortgage insurance Private mortgage insurance

Mortgage protection insurance refers to a type of decreasing term life insurance policy where you pay a non-changing premium for the duration of your mortgage. If you die while the policy is in effect, the insurance pays off your mortgage. The lender can become the beneficiary of the policy if the borrower paying for the policy defaults on the loan.

Mortgage protection insurance cost factors

If the outstanding balance of your mortgage is high, your monthly premium will be high as well, and your premium will remain the same even as the balance decreases. This is because you are more likely to die as time goes on, increasing the likelihood that your life insurance company will have to pay on your policy.

Mortgage protection insurance can be purchased either at the same time you buy a home, or at any time in the future. As with other types of life insurance, your age, smoking status and value of your death benefit (the amount left on your mortgage) are taken into account when a life insurance company reviews your application and sets a price.

Mortgage insurance options

Mortgage protection insurance policies will only pay the balance of your mortgage at the time of your death (or maybe a little more if you paid ahead on your mortgage). If you decide this is appropriate for your situation, remember that a regular decreasing term life policy one not marketed as a “mortgage protection” policy can be used for the same purpose, and may also cost less. However, if you want to give your beneficiaries a choice of how to use the insurance money, consider level term life insurance instead.

Depending on your insurance company, joint mortgage protection insurance may be available that covers both you and your spouse and pays out when either of you die.

If you refinance, see if a new policy will get you a better premium. If you default on your mortgage, check with your life insurance company and see if they will extend your coverage.

Mortgage protection insurance and private mortgage insurance

Though they have similar names, these two types of insurance are not related. Private mortgage insurance (PMI) is typically required by the lender when you purchase a house and make a down payment of less than 20%. “Lenders take a risk when a buyer puts down less than 20%,” says Sam Belden, Vice President at Insurance.com. “Private Mortgage Insurance is a way for lenders to protect themselves if a buyer didn’t put much down and ends up in foreclosure.” In today’s difficult economic environment, few lenders will even grant a loan with less than 20% down, so PMI may not be offered in the future.

Although PMI makes it easier for you to get a loan and can help you get a house without waiting to build up savings, it pays the lender, not you. It does not reduce the amount of money you owe the lender. It is not a substitute for life insurance or mortgage protection insurance, which will pay off all or most of your mortgage in the event of your death.

Not what you were looking for? Have questions or feedback? Please let us know.

Originally posted September 20, 2004.

Private mortgage insurance Private mortgage insurance Private mortgage insurance Private mortgage insurance Private mortgage insurance


With a Private Mortgage, Everybody Wins (Ideally), private mortgage.#Private #mortgage


How to Use a Private Mortgage

Private mortgage

Private mortgage

A private mortgage is a loan made by an individual or a business that is not a traditional mortgage lender. Whether you’re thinking of borrowing for a home or of lending money, private loans can be beneficial for everybody if they’re done correctly. However, things can also go badly — for your relationship and your finances.

As you evaluate the decision to use (or offer) a private mortgage, keep the big picture in mind.

Typically, the goal is to create a win-win solution where everybody gains financially without taking too much risk.

Private mortgage or hard money? This page focuses on mortgage loans with somebody you know. If you re looking to borrow from private lenders (that you don t know personally), read about hard money loans. Hard money lenders are useful for investors and others who have a hard time getting approved by traditional lenders. They are often more expensive than other mortgages and require low LTV ratios.

Why Go Private?

The world is full of lenders, including big banks, local credit unions, and online lenders. So why not just fill out an application and borrow from one of them?

Qualifying: For starters, borrowers might not be able to qualify for a loan from a traditional lender. Banks require a lot of documentation, and sometimes your finances won t look the way the bank wants. Even if you re more than able to repay the loan, mainstream lenders are required to verify that you have the ability to repay, and they have specific criteria to complete that verification.

For example, self-employed individuals don t always have the W2 forms and steady work history that lenders like, and young adults might not have good credit scores (yet).

Keep it in the family: A loan among family members can make good financial sense.

  • Borrowers can save money by paying a relatively low interest rate to family members (instead of paying bank interest rates). Just be sure to follow IRS rules if you plan to keep rates low.
  • Lenders with extra cash on hand can earn more by lending than they’d get from bank deposits like CDs and savings accounts.

Understand the Risks

Life is full of surprises, and any loan can go bad. Of course, everybody has good intentions, and these deals often seem like a great idea when they first come to mind. But pause long enough to consider the following issues before you get too deep into something that will be difficult to unwind.

Relationships: Existing relationships between the borrower and seller may change. Especially if things get difficult for the borrower, borrowers may feel extra stress and guilt. Lenders also face complications — they may need to decide whether to sternly enforce agreements or take a loss.

Lender risk tolerance: The idea may be to make a loan (with the expectation of getting repaid), but surprises happen. Evaluate the lender’s ability to take risk (becoming unable to retire, risk of bankruptcy, etc.) before moving forward. This is especially important if others are dependent on the lender (dependent children or spouses, for example).

Property value: Real estate is expensive. Fluctuations in value can amount to tens (or hundreds) of thousands of dollars. Lenders need to be comfortable with the property condition and location — especially with all of those eggs in one basket.

Maintenance: It takes time, money, and attention to maintain property. Even with a good inspector, issues come up. Lenders need to be sure that the resident or owner will address problems before they get out of hand and be able to pay for maintenance.

Title issues and order of payments: The lender should insist on securing the loan with a lien (see below). In case the borrower adds any additional mortgages (or somebody puts a lien on the house), you’ll want to be sure that the lender gets paid first. However, you’ll also want to check for any issues before buying the property. Traditional mortgage lenders insist on a title search, and the borrower or lender should ensure that the property has a clear title. Title insurance provides extra protection, and would be a wise purchase.

Tax complications: Tax laws are tricky, and moving large sums of money around can create problems.

Before you do anything, speak with a local tax advisor so that you’re not caught by surprise.

Private Mortgage Agreements

Any loan should be well-documented. A good loan agreement puts everything in writing so that everybody’s expectations are clear and there are fewer possible surprises. After several years, you (or the other person) may forget what you discussed and what you had in mind, but a written document has a much better memory.

Documentation does more than just keep your relationship intact — it protects both parties to a private mortgage. Again, you don t know what you don t know about the future, and it s best to avoid any legal loose ends from the get-go. What’s more, a written agreement might make the deal work better from a tax perspective.

As you review your agreement, make sure every conceivable detail is spelled out, starting with:

  • When are payments due? Monthly, quarterly, on the first of the month, etc.
  • What if payments aren’t received? Can the lender charge a fee, and is there a grace period?
  • How/where should payments be made? Electronic payments are best.
  • Can the borrower prepay, and is there any penalty for doing so?
  • Is the loan secured with anycollateral? It better be.
  • What can the lender do if the borrower misses payments? Can the lender charge fees, report to credit reporting agencies, or foreclose on the home?

Secure the Loan

It’s wise to secure the lender’s interest — even if the lender and borrower are close friends or family members. A secured loan allows the lender to take the property (through foreclosure) and get their money back in a worst-case-scenario.

Is that really necessary? Again, you don t know what you don t know about the future.

A borrower (who has the ability and every intention to repay) may die or get sued unexpectedly. If the property is held in the borrower’s name only — without a properly filed lien — creditors can go after their home or pressure the borrower to use the home’s value to satisfy a debt. A secured mortgage helps protect the lender’s interest, assuming everything is structured correctly. In fact, the term mortgage technically means security — not loan.

Securing a loan with property may also help with taxes. For example, the borrower might be able to deduct interest costs on the loan, but only if the loan is properly secured. Talk with a local tax preparer or CPA for more details and ideas.

How to Do a Private Mortgage Correctly

If you’re considering a private mortgage, think like a “traditional” lender (although you can still offer better rates and a more consumer-friendly product). Imagine what could go wrong, and structure the deal so that you are not dependent on good luck, good memories, or good intentions.

For documentation (loan agreements and filing liens, for example), work with qualified experts. Talk to local attorneys, your tax preparer, and others who can help guide you through the process. If you re working with large sums of money, this isn t a DIY project. Several online services can handle everything for you, and local service providers can also do the job. Ask exactly which services are provided, including:

  • Will you get written mortgage agreements?
  • Can payments be handled by somebody else (and automated)?
  • Will documents be filed with local governments (to secure the loan, for example)?
  • Will payments be reported to credit bureaus (which helps borrowers build credit)?

PMI – What Is Private Mortgage Insurance, private mortgage lenders.#Private #mortgage #lenders


Private mortgage insurance, or PMI: Just the basics

Private mortgage lenders

If your down payment on a home is less than 20%, you will have to pay for mortgage insurance.

What is PMI?

When you make a down payment of less than 20%, the lender requires private mortgage insurance, or PMI. The policy protects the lender from losing money if you end up in foreclosure. PMI also is required if you refinance the mortgage with less than 20% equity.

Private mortgage insurance fees vary, depending on the size of the down payment and your credit score, from around 0.3% to about 1.5% of the original loan amount per year. Some years, PMI premiums are tax-deductible and some years they’re not, depending upon the whim of Congress.

*Rate varies according to size of down payment, credit score and insurer.

Source: Bankrate.com, Radian mortgage insurance calculator

Most PMI policies require the borrower to pay monthly. Borrowers also have the option of paying for mortgage insurance with a large upfront payment.

PMI can be canceled

Your lender must automatically cancel PMI when your outstanding loan balance drops to 78% of the home’s original value. This probably will take several years.

You can speed up the cancellation of mortgage insurance by keeping track of your payments. Once the loan balance reaches 80% of the home’s original value, you may ask the lender to discontinue the mortgage insurance premiums.

To put it another way: You can request cancellation of mortgage insurance when the loan-to-value ratio drops to 80%. The lender is required to cancel private mortgage insurance when the loan-to-value ratio drops to 78%.

Loan-to-value ratio

The loan-to-value ratio, or LTV, describes mortgage debt as a percentage of how much the home is worth. It is a financial term used by lenders.

Formula: Mortgage amount owed / Appraised value

Example: Alex owes $60,000 on the mortgage. The house is worth $100,000.

$60,000 mortgage balance / $100,000 = 0.60. This means that Alex’s loan-to-value ratio is 60%.

We’re talking PMI, not FHA

Recent FHA-insured loans require payment of mortgage insurance premiums for the life of the loan. FHA mortgage insurance premiums can’t be canceled. Instead, you have to refinance the loan. Read “7 crucial facts about FHA loans.”


Health Insurance, Private Health Insurance Australia, iSelect, private mortgage insurance.#Private #mortgage #insurance


Compare private health insurance

The right health insurance for you

Our experts know their stuff. Their smarts, combined with our technology, means you get the right private health cover.

We guarantee it

If you find an identical health insurance policy cheaper after buying with iSelect, we’ll give you a gift card worth 200% of the difference. Terms apply

We re number one

Our strong partnerships with health insurance companies means we’re the most visited private health insurance comparison site in Australia.*

* iSelect is Australia’s #1 health insurance comparison site based on Hitwise data covering November 2015 to November 2016. More info

We’re more than just health insurance

Compare Life Insurance quotes from some of Australia’s leading insurers

Life insurance

Compare Car Insurance quotes from our range of insurers

Car Insurance

Compare and buy from over 170 electricity, gas and solar plans

Electricity & Gas

Compare and apply from over 1,000 home loans from more than 25 lenders

Home Loans

Compare and buy from hundreds of Health Insurance policies from a range of leading providers

Health Insurance

Compare and buy from over 280 broadband, ADSL, NBN, Cable and Entertainment plans

Broadband

Find out more about Home and Contents Insurance and get a quote online

Home & Contents Insurance

Travelling soon? Find the right travel insurance using our comparison tool

Travel Insurance

Easily compare credit cards & their features from a range of providers

Credit Cards

Find the right mobile solution and learn more about mobile plans

Mobile Phones

Compare pet insurance quotes from a range of insurers

Pet Insurance

(within the iSelect Group)

Private mortgage insurance

It’s your turn to save Australia!

See how much you could save on your health insurance.

How users rated our service

iSelect it

Compare, research and buy

  • Private mortgage insurance

Buy with confidence

Plenty of partners and thousands of plans, products and policies. We’ll find the one for you.

  • Private mortgage insurance

    Experts in the big stuff

    We’ve got the right people to advise you, whether it’s your health insurance or your home loan.

  • Private mortgage insurance

    From start to finish

    Whether you’re looking to research and compare or you’re ready to lock it in, we’re here to help.

  • Private mortgage insurance

    Same product, no mark up

    Our commission doesn’t affect what you pay, our expert advice costs you nothing.


  • Deducting (PMI) Private Mortgage Insurance in 2016, 2017, private mortgage insurance.#Private #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 DeductiblePrivate 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, private mortgage.#Private #mortgage


    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 DeductiblePrivate mortgage

    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.


    With a Private Mortgage, Everybody Wins (Ideally), private mortgage.#Private #mortgage


    How to Use a Private Mortgage

    Private mortgage

    Private mortgage

    A private mortgage is a loan made by an individual or a business that is not a traditional mortgage lender. Whether you’re thinking of borrowing for a home or of lending money, private loans can be beneficial for everybody if they’re done correctly. However, things can also go badly — for your relationship and your finances.

    As you evaluate the decision to use (or offer) a private mortgage, keep the big picture in mind.

    Typically, the goal is to create a win-win solution where everybody gains financially without taking too much risk.

    Private mortgage or hard money? This page focuses on mortgage loans with somebody you know. If you re looking to borrow from private lenders (that you don t know personally), read about hard money loans. Hard money lenders are useful for investors and others who have a hard time getting approved by traditional lenders. They are often more expensive than other mortgages and require low LTV ratios.

    Why Go Private?

    The world is full of lenders, including big banks, local credit unions, and online lenders. So why not just fill out an application and borrow from one of them?

    Qualifying: For starters, borrowers might not be able to qualify for a loan from a traditional lender. Banks require a lot of documentation, and sometimes your finances won t look the way the bank wants. Even if you re more than able to repay the loan, mainstream lenders are required to verify that you have the ability to repay, and they have specific criteria to complete that verification.

    For example, self-employed individuals don t always have the W2 forms and steady work history that lenders like, and young adults might not have good credit scores (yet).

    Keep it in the family: A loan among family members can make good financial sense.

    • Borrowers can save money by paying a relatively low interest rate to family members (instead of paying bank interest rates). Just be sure to follow IRS rules if you plan to keep rates low.
    • Lenders with extra cash on hand can earn more by lending than they’d get from bank deposits like CDs and savings accounts.

    Understand the Risks

    Life is full of surprises, and any loan can go bad. Of course, everybody has good intentions, and these deals often seem like a great idea when they first come to mind. But pause long enough to consider the following issues before you get too deep into something that will be difficult to unwind.

    Relationships: Existing relationships between the borrower and seller may change. Especially if things get difficult for the borrower, borrowers may feel extra stress and guilt. Lenders also face complications — they may need to decide whether to sternly enforce agreements or take a loss.

    Lender risk tolerance: The idea may be to make a loan (with the expectation of getting repaid), but surprises happen. Evaluate the lender’s ability to take risk (becoming unable to retire, risk of bankruptcy, etc.) before moving forward. This is especially important if others are dependent on the lender (dependent children or spouses, for example).

    Property value: Real estate is expensive. Fluctuations in value can amount to tens (or hundreds) of thousands of dollars. Lenders need to be comfortable with the property condition and location — especially with all of those eggs in one basket.

    Maintenance: It takes time, money, and attention to maintain property. Even with a good inspector, issues come up. Lenders need to be sure that the resident or owner will address problems before they get out of hand and be able to pay for maintenance.

    Title issues and order of payments: The lender should insist on securing the loan with a lien (see below). In case the borrower adds any additional mortgages (or somebody puts a lien on the house), you’ll want to be sure that the lender gets paid first. However, you’ll also want to check for any issues before buying the property. Traditional mortgage lenders insist on a title search, and the borrower or lender should ensure that the property has a clear title. Title insurance provides extra protection, and would be a wise purchase.

    Tax complications: Tax laws are tricky, and moving large sums of money around can create problems.

    Before you do anything, speak with a local tax advisor so that you’re not caught by surprise.

    Private Mortgage Agreements

    Any loan should be well-documented. A good loan agreement puts everything in writing so that everybody’s expectations are clear and there are fewer possible surprises. After several years, you (or the other person) may forget what you discussed and what you had in mind, but a written document has a much better memory.

    Documentation does more than just keep your relationship intact — it protects both parties to a private mortgage. Again, you don t know what you don t know about the future, and it s best to avoid any legal loose ends from the get-go. What’s more, a written agreement might make the deal work better from a tax perspective.

    As you review your agreement, make sure every conceivable detail is spelled out, starting with:

    • When are payments due? Monthly, quarterly, on the first of the month, etc.
    • What if payments aren’t received? Can the lender charge a fee, and is there a grace period?
    • How/where should payments be made? Electronic payments are best.
    • Can the borrower prepay, and is there any penalty for doing so?
    • Is the loan secured with anycollateral? It better be.
    • What can the lender do if the borrower misses payments? Can the lender charge fees, report to credit reporting agencies, or foreclose on the home?

    Secure the Loan

    It’s wise to secure the lender’s interest — even if the lender and borrower are close friends or family members. A secured loan allows the lender to take the property (through foreclosure) and get their money back in a worst-case-scenario.

    Is that really necessary? Again, you don t know what you don t know about the future.

    A borrower (who has the ability and every intention to repay) may die or get sued unexpectedly. If the property is held in the borrower’s name only — without a properly filed lien — creditors can go after their home or pressure the borrower to use the home’s value to satisfy a debt. A secured mortgage helps protect the lender’s interest, assuming everything is structured correctly. In fact, the term mortgage technically means security — not loan.

    Securing a loan with property may also help with taxes. For example, the borrower might be able to deduct interest costs on the loan, but only if the loan is properly secured. Talk with a local tax preparer or CPA for more details and ideas.

    How to Do a Private Mortgage Correctly

    If you’re considering a private mortgage, think like a “traditional” lender (although you can still offer better rates and a more consumer-friendly product). Imagine what could go wrong, and structure the deal so that you are not dependent on good luck, good memories, or good intentions.

    For documentation (loan agreements and filing liens, for example), work with qualified experts. Talk to local attorneys, your tax preparer, and others who can help guide you through the process. If you re working with large sums of money, this isn t a DIY project. Several online services can handle everything for you, and local service providers can also do the job. Ask exactly which services are provided, including:

    • Will you get written mortgage agreements?
    • Can payments be handled by somebody else (and automated)?
    • Will documents be filed with local governments (to secure the loan, for example)?
    • Will payments be reported to credit bureaus (which helps borrowers build credit)?

    With a Private Mortgage, Everybody Wins (Ideally), private mortgage lenders.#Private #mortgage #lenders


    How to Use a Private Mortgage

    Private mortgage lenders

    Private mortgage lenders

    A private mortgage is a loan made by an individual or a business that is not a traditional mortgage lender. Whether you’re thinking of borrowing for a home or of lending money, private loans can be beneficial for everybody if they’re done correctly. However, things can also go badly — for your relationship and your finances.

    As you evaluate the decision to use (or offer) a private mortgage, keep the big picture in mind.

    Typically, the goal is to create a win-win solution where everybody gains financially without taking too much risk.

    Private mortgage or hard money? This page focuses on mortgage loans with somebody you know. If you re looking to borrow from private lenders (that you don t know personally), read about hard money loans. Hard money lenders are useful for investors and others who have a hard time getting approved by traditional lenders. They are often more expensive than other mortgages and require low LTV ratios.

    Why Go Private?

    The world is full of lenders, including big banks, local credit unions, and online lenders. So why not just fill out an application and borrow from one of them?

    Qualifying: For starters, borrowers might not be able to qualify for a loan from a traditional lender. Banks require a lot of documentation, and sometimes your finances won t look the way the bank wants. Even if you re more than able to repay the loan, mainstream lenders are required to verify that you have the ability to repay, and they have specific criteria to complete that verification.

    For example, self-employed individuals don t always have the W2 forms and steady work history that lenders like, and young adults might not have good credit scores (yet).

    Keep it in the family: A loan among family members can make good financial sense.

    • Borrowers can save money by paying a relatively low interest rate to family members (instead of paying bank interest rates). Just be sure to follow IRS rules if you plan to keep rates low.
    • Lenders with extra cash on hand can earn more by lending than they’d get from bank deposits like CDs and savings accounts.

    Understand the Risks

    Life is full of surprises, and any loan can go bad. Of course, everybody has good intentions, and these deals often seem like a great idea when they first come to mind. But pause long enough to consider the following issues before you get too deep into something that will be difficult to unwind.

    Relationships: Existing relationships between the borrower and seller may change. Especially if things get difficult for the borrower, borrowers may feel extra stress and guilt. Lenders also face complications — they may need to decide whether to sternly enforce agreements or take a loss.

    Lender risk tolerance: The idea may be to make a loan (with the expectation of getting repaid), but surprises happen. Evaluate the lender’s ability to take risk (becoming unable to retire, risk of bankruptcy, etc.) before moving forward. This is especially important if others are dependent on the lender (dependent children or spouses, for example).

    Property value: Real estate is expensive. Fluctuations in value can amount to tens (or hundreds) of thousands of dollars. Lenders need to be comfortable with the property condition and location — especially with all of those eggs in one basket.

    Maintenance: It takes time, money, and attention to maintain property. Even with a good inspector, issues come up. Lenders need to be sure that the resident or owner will address problems before they get out of hand and be able to pay for maintenance.

    Title issues and order of payments: The lender should insist on securing the loan with a lien (see below). In case the borrower adds any additional mortgages (or somebody puts a lien on the house), you’ll want to be sure that the lender gets paid first. However, you’ll also want to check for any issues before buying the property. Traditional mortgage lenders insist on a title search, and the borrower or lender should ensure that the property has a clear title. Title insurance provides extra protection, and would be a wise purchase.

    Tax complications: Tax laws are tricky, and moving large sums of money around can create problems.

    Before you do anything, speak with a local tax advisor so that you’re not caught by surprise.

    Private Mortgage Agreements

    Any loan should be well-documented. A good loan agreement puts everything in writing so that everybody’s expectations are clear and there are fewer possible surprises. After several years, you (or the other person) may forget what you discussed and what you had in mind, but a written document has a much better memory.

    Documentation does more than just keep your relationship intact — it protects both parties to a private mortgage. Again, you don t know what you don t know about the future, and it s best to avoid any legal loose ends from the get-go. What’s more, a written agreement might make the deal work better from a tax perspective.

    As you review your agreement, make sure every conceivable detail is spelled out, starting with:

    • When are payments due? Monthly, quarterly, on the first of the month, etc.
    • What if payments aren’t received? Can the lender charge a fee, and is there a grace period?
    • How/where should payments be made? Electronic payments are best.
    • Can the borrower prepay, and is there any penalty for doing so?
    • Is the loan secured with anycollateral? It better be.
    • What can the lender do if the borrower misses payments? Can the lender charge fees, report to credit reporting agencies, or foreclose on the home?

    Secure the Loan

    It’s wise to secure the lender’s interest — even if the lender and borrower are close friends or family members. A secured loan allows the lender to take the property (through foreclosure) and get their money back in a worst-case-scenario.

    Is that really necessary? Again, you don t know what you don t know about the future.

    A borrower (who has the ability and every intention to repay) may die or get sued unexpectedly. If the property is held in the borrower’s name only — without a properly filed lien — creditors can go after their home or pressure the borrower to use the home’s value to satisfy a debt. A secured mortgage helps protect the lender’s interest, assuming everything is structured correctly. In fact, the term mortgage technically means security — not loan.

    Securing a loan with property may also help with taxes. For example, the borrower might be able to deduct interest costs on the loan, but only if the loan is properly secured. Talk with a local tax preparer or CPA for more details and ideas.

    How to Do a Private Mortgage Correctly

    If you’re considering a private mortgage, think like a “traditional” lender (although you can still offer better rates and a more consumer-friendly product). Imagine what could go wrong, and structure the deal so that you are not dependent on good luck, good memories, or good intentions.

    For documentation (loan agreements and filing liens, for example), work with qualified experts. Talk to local attorneys, your tax preparer, and others who can help guide you through the process. If you re working with large sums of money, this isn t a DIY project. Several online services can handle everything for you, and local service providers can also do the job. Ask exactly which services are provided, including:

    • Will you get written mortgage agreements?
    • Can payments be handled by somebody else (and automated)?
    • Will documents be filed with local governments (to secure the loan, for example)?
    • Will payments be reported to credit bureaus (which helps borrowers build credit)?

    Legitimate Private Lenders for High Risk Personal Loans – Apply Online Now – Instant Decision,


    Private Lenders

    Benefits and drawbacks of dealing with private lenders

    This is not uncommon that a person is walking into a bank for taking out a loan, but walking out without any positive response. This is even truer for people who have a bad credit profile. Banks and other conventional financial institutions often decline the loan application of people with unhealthy credit. In such a situation, the only option left for such people is to borrow loans from the private lenders. Such lenders offer loan to any people, irrespective of credit profile. So, if you re also facing challenges in getting a loan to cope with emergency cash crunches of your life, you may go to a private lender to take out a personal loan.

    Private lenders are people or group of people who utilize their money by giving loan to people and make profits by levying interests on the loan amount. Generally these lenders prefer to lend money to the entrepreneurs who are involved in real estate business or have a robust business idea, as they can afford to pay higher interest rates than common people. However, private lenders lend money to the individuals also. At the same time, most of these lenders prefer to invest in higher risk ventures; they are specialists in this field. They understand both the risks and profit margin associated with high risk businesses. They lend money depending on the appraisal of the asset or business for which the borrower is taking out the loan. Generally these lenders lend money for no longer than 5 years.

    Benefits of working with private lenders

    Traditional money lenders often decline the loan application of people who have so many open lines of credit or want to fund repairs on a home bought for cash. Conventional lending institutions usually don t want to invest money in property which is not owned for at least a year. This is known as seasoning in the property market. Moreover, if the applicant has a history of foreclosure or bankruptcy, then the situation becomes even worse and thus the chance of getting a loan from banks or credit unions becomes too little. Taking out a loan from the private lenders is perhaps the best and most legitimate option under such circumstances.

    Drawbacks of working with private lenders

    Private lenders come handy while bank, credit unions and other conventional financial organizations refuse to lend money to a borrower that fails to meet their eligibility criteria. But when it comes to getting a loan from a private lender you must be very careful choosing the right one. The market is flooded with fraudulent private lenders. Unless you choose the right and a legitimate lender, you may become a victim of such a lender and this is the main drawback of working with a private lender. Rapacious lenders tend to take advantage of your distressed condition. You re more susceptible to become a prey, if your credit profile is unhealthy. Poor credit profile confines a person to get an unsecured loan from a conventional lender. Automatically, such people knock the door of private lenders without verifying their legitimacy.

    How to check the legitimacy of private lenders

    If you re in need of taking out a loan from a private lender, make sure you check the following points before submitting your loan application. The points would help you verify the lender s legitimacy and also report a scam, if applicable.

    Keep track of the communication First of all, you must document all the communications you have with the lender. Also note down the time, date and gist of the conversation you have with the lender. Don t forget to take a note of the commitments he makes about repaying the loans. If he sends voice mails, make sure you record the mail and for emails, take print out of the mails.

    Preserve all relevant documents Don t misplace any relevant documents like cancelled check, bank statement, loan agreement or any statement given by the bank stating that the fund was not deposited or the check was returned due to inadequate funds. If possible, ask the bank for providing you with the routing number.

    Instruct your bank Instruct you bank to accept the money transferred by your lender or approve payments or transfer request to your lender.

    Assign a private investigator – If the lender cheats you, you may recruit a legitimate private investigator. Contact the person and tell him about the incident you faced. Now ask him to document this scam and also ask him about his working procedure. If he accepts your offer and takes up the case, and collect sufficient proofs to establish the fraudulent activity that you have become the victim of, you call the respective authorities and report the scam.

    Search through personal loan search engine This is a great option to find legitimate online private lenders. There are some websites that help people find instant cash online by adding the most legitimate lenders of the industry to their network. The interest rates charged by most of these lenders added to these sites range between 5 percent APR to 32 percent APR depending on the credit profile of the borrower.

    While looking for private lenders you must consider the above-mentioned points. These would help you find and deal with a good lender that offers favorable loan terms and reasonable interest rate.

    If you re in search of genuine and non-rapacious private lenders for getting funding for you small business, you may search through our websites. We will help you finding the maximum loan amount with minimum interest rates from the best lenders of the industry.


    Deducting (PMI) Private Mortgage Insurance in 2016, 2017, private mortgage insurance.#Private #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 DeductiblePrivate 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.