 |
Further
Reading ...
|
|
Nine Questions To Ask Yourself Before You Head To The Office Party - Lydia Ramsey
One thing you can count on during the holiday season is the obligatory office party. No matter what the size of the organization, there is always an effort to bring coworkers together for one more moment of merriment. Some people look forward to...
Aggregate And Industrial Mining in Ohio - Diana Barnum
Aggregate And Industrial Mining in Ohio Each of us depends on Ohio’s mineral aggregate resources. Every American born today will need 3.6 million pounds of minerals, metal and fuels in his of her lifetime, including 1.7 million pounds of...
A Guide to Choosing The Perfect Color(s) For Your Company Logo - Alif Wahab
A good logo design is very important for any company wishing to build their brand. Once you have a good logo, the next step is choosing the right color(s) for your company logo. Why? Because we see the world in colors, and we associate colors...
The Top Ten Ways to Change a Mediocre Employee Into a High Performing One - Monty J Sharp
The Top Ten Ways to Change a Mediocre Employee Into a High Performing One By Monty J. Sharp, Certified Comprehensive Coach http://www.workteamcoaching.com Teambuilding expert and business consultant, Peter B. Grazier once said, “Employees want to...
|
|
|
Avoiding PMI
|
 |
Written By:
Ethan Hunter
|
|
|
PMI - a recurring, monthly, unwelcome guest. It sounds similar to and is about as welcomed as a similar acronym. PMI is private mortgage insurance. This insurance policy is paid for by the homebuyer when the amount of their primary mortgage is greater than 80% of the value of the property.
You will note that the term "primary mortgage" was used. This is for a specific reason. It is not the total of all mortgages and home loans on the property that is evaluated, but rather the amount of the primary or largest mortgage on the property that can trigger PMI.
PMI is calculated by taking 0.5% of your primary loan balance and dividing it by 12 (12 monthly payments). For example, if your primary mortgage is $200,000 and you are required to pay PMI, your mortgage payments would be an additional $83.34 per month. For most homebuyers, this additional premium is a considerable financial burden to undertake.
There are ways around PMI for those homebuyers unable to put down 20% or more on their new home. Mortgage lenders have created loan packages which include two or more home loans that when combined exceed the 80% threshold, while no one of the loans exceed that threshold. Typically there is a primary mortgage and either one or two home equity loans taken out simultaneously which are 81% - 100% (or sometimes more) of the home value. This affords the homebuyer to put less than 20% down, or perhaps put nothing down at all while at the same time eliminating the need to pay PMI.
If you know you are going to be putting less than 20% down on the purchase of your home you should immediately speak to your home lender about avoiding PMI. A good home lender will inform you about these types of packages. Though the rules on these packages may differ from state to state, the vast majority of states allow for these types of loan packages.
When you review this type of package you will note that there will invariably be a different interest rate on the mortgage than there is on the home equity loan(s). The mortgage rate may have a slightly lower interest rate or perhaps even a considerably lower interest rate. You should be able to calculate what the monthly payments would be for the combined loans and then determine if it comes out less than a single mortgage with PMI. Obviously, a good lender is only going to present you the package if the payments are cheaper - continued below ...
|
|
|
continued ...
than a single loan with PMI.
You are able to refinance the loans at any point and combine them into one payment. You would only do this when the value of the home is more than 20% above of the amount you will mortgage. As the value of your home increases through home improvements or time, you can receive an appraisal and speak to your home loan professional to determine if refinancing the loans into one loan makes sense.
These types of loans are often referred to as 80-10-10 loans or 80-15 loans, among other names. An 80-10-10 loan is a mortgage at 80% of the amount to be financed and than two home equity loans at 10% each. You will likely find that all three loans will have a different interest rate with this type of package. 80-15 loans are similar but would be the main loan at 80% and a secondary loan at 15% with the buyer putting down the additional 5%.
It is important to note that when financing 90% - 100% of a home, or more, the appraisal will play a key role in the loan approval process. If the appraisal does not come out at a pre-determined amount, the lender may feel that the transaction is not a sound one. You may need to go back and renegotiate the purchase price of the home or run the risk of being denied the mortgage. Most real estate contracts, however, do have a clause in them that allows the buyer out of the contract if they are denied a mortgage. You will want to speak to the lawyers and real estate agent in advance if you are planning for applying for this type of loan. Some contingency clauses in contracts specify a maximum percentage of a loan you need to qualify for and if you are denied for a loan at a higher percentage you are not protected by this clause.
It is important for you to have all of this information in place before you start your home search. By knowing how your financing is going to be handled you will be able to make sure you are protected in the transaction and you will also be able to negotiate a better deal since your financing has been completed or is close to being completed. The key is knowing in advance what percentage of the value of the home you are able to and willing to put down on your new home. Ethan Hunter is the author of many credit related articles. If you are looking for help with Home Loans or any type of credit issue please visit us at http://www.homeloanave.com
|
|
|
|
 |
|
|
| _Additional Resources ... |
|
Learn Some Useful Feng Shui Career Tips - Jakob Jelling
As it does with every main life aspect, feng shui also provides tips and guidelines to help you improving your career. If your career is not moving on in the way you wish, that is due to a lack of balance and harmony within your environment and...
7 Must-Have Traits For Work At Home Success - Trent Brownrigg
There are a lot of reasons why so many people fail shortly after starting a home business. In order to achieve your work at home dreams there are certain traits you must possess or acquire. I have listed 7 must-have traits that I consider to be...
Why One Should Chose A Network Marketing Home Based Business - jack foley
There are many advantages for having one's own business but I believe a network marketing home business has to be the crème de la crème. Network marketing above any other online business will continue creating the most online entrepreneurs. Firstly...
|
|
|
|
|
|
|
|
|
|
