Mortgage insurance (MI) is an insurance policy mandated by lenders to protect them from losses if a Watertown MA home owner fails to pay their loan. When the lender goes to sell a property, they are unlikely to regain the total remaining balance on the mortgage. MI applies to first mortgages where the home buyers are financing greater than 80% of the sale price of the home. There is generally a lump sum MI fee due at closing and monthly fees based on a percentage of the initial loan balance. Watertown MA mortgage MI detail and recommendations on getting rid of MI are shown below.
Amount of MI
MI percentages differ based on the type of loan. Watertown MA home owners should get a quote from a mortgage professional to obtain sample figures and evaluate the impact that it will have on recurring mortgage payments. Rates can also change at certain times, so be sure to get up-to-date figures when you are evaluating your ability to purchase a home. Once you close on a loan, the MI rate for that specific mortgage will remain the same for the life of that loan. With certain loans, 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 Getting Rid Of MI
Monthly MI fees will typically disappear when the loan is paid down to 80% of the beginning home value. Most lenders allow removal of MI a few percentages earlier if initiated by the homeowner when that percentage mark is reached. Refer to your mortgage documents for the percentages that apply to your loan. In an increasing real estate market, homeowners can also request a new appraisal (from a third-party approved by the mortgage company) to document that the value of the home has increased and that you may have therefore reached the 80% mark sooner.
Watertown MA Mortgage MI Detail
Most home buyers are unable to afford a 20% down payment and therefore cannot avoid MI. By knowing how MI works and how to get rid of it, Watertown MA home buyers can realize significant savings. We hope that you found this Watertown MA mortgage MI detail useful and will be able to use the recommendations on getting rid of MI.