Mortgage Insurance – 4 Useful Questions and Answers
1.
What are the different types of mortgage
insurance?
Generally there are 2 types of
mortgage insurance. Mortgage insurance
bought from the government (FHA, VA), and mortgage insurance for conventional loans
bought from the private sector (PMI, or Private Mortgage Insurance).
2.
Who is required to have mortgage insurance?
Typically with a conventional loan,
if you put less than 20% down your lender will require you to carry mortgage
insurance. However, once you reach 20%
equity in your home (meaning you have paid off at least 20% of what your home
is worth) you can request your PMI to be cancelled because you have invested
sufficiently in your home (So if you own a home worth $100,000 and have paid
down $20,000 of the principal, you can request to cancel your PMI).With
government loans, mortgage insurance will likely be required for the longevity
of the loan.
3.
What does mortgage insurance cost?
With a conventional mortgage, your
rates will vary depending on the size of your down payment and your credit
score. Generally, the higher your down
payment and the higher your credit score the lower your premium. These premiums can range from $30-$70 per
month for every $100,000 borrowed. For
FHA mortgages, there is an up-front mortgage insurance premium and an annual
premium which is collected monthly. FHA
mortgage insurance is considerably higher than PMI and currently those rates
are approximately 1.75% of the loan amount for the up-front mortgage insurance
premium and 1.35% of the loan amount for the annual premium. For more specific details regarding other
government loans or your specific situation contact Rob Smee,
Mortgage Consultant with Country Club Mortgage.
4.
Why do I need mortgage insurance?
Lenders require you to have
mortgage insurance so if in the event that you can no longer make payment on
your home, the lender will still get paid (through the insurance policy). Mortgage insurance is a safeguard against
default on a loan for the lender.
For more information regarding mortgage insurance and other
mortgage topics, contact myself or your local mortgage professional.
Rob Smee, Mortgage Consultant with Country Club Mortgage.
No comments:
Post a Comment