Mortgage insurance (MI) is a policy required by mortgage providers to protect them from losses if a property owner defaults on their loan. When the mortgage provider goes to sell a house, they are unlikely to obtain the total amount owed on the loan. MI applies to first mortgages where the home owners are financing more than 80% of the value of the home. There is customarily an up-front MI fee due at closing and recurring fees based on a percentage of the amount of the loan. MA mortgage MI definition and recommendations on eliminating MI are provided below.
MI Calculations
MI rates differ based on the type of loan. Home buyers should ask a mortgage professional to get accurate calculations and analyze the impact that it will have on anticipated mortgage payments. Rates can also change from time-to-time, so be sure to get current figures when you are evaluating your ability to purchase a home. Once you close on a loan, the MI rate for that specific loan will remain the same for the life of that mortgage. With certain mortgages, such as FHA, you may request a refund of a portion of the up-front MI charged at closing if you refinance within a certain period of time.
Recommendations on Eliminating MI
Recurring MI payments will typically be removed when the loan is paid down to 80% of the beginning purchase price. Most banks allow removal of MI a little earlier if requested by the homeowner when that percentage mark is reached. Check your mortgage paperwork for the percentages that apply to your loan. In an increasing real estate market, homeowners can also request a new appraisal (from a vendor approved by the mortgage company) to document that the value of the home has improved and that you may have therefore reached the 80% mark sooner.
MA Mortgage MI Definition and Help
Most home buyers are unable to afford a 20% down payment and therefore cannot avoid MI. By knowing how MI works and how to eliminate it, home buyers can avoid paying more MI than needed. We hope that you found this MA mortgage MI definition useful and will be able to use the recommendations on eliminating MI. For additional information on this and other related topics, contact Jonathan de Araujo at William Raveis Real Estate by calling 339-200-9444 or emailing jonathansrealestate@gmail.com.
