16
Oct
By First Rate Financial Group
Mortgage

What Exactly Is Private Mortgage Insurance (PMI)?

What Exactly Is Private Mortgage InsurancePMI, which is also called private mortgage insurance, is protect that the lender may ask the buyer to purchase. In the event that the buyer defaults on their home loan and the home enters foreclosure, the lender has a way to recoup their losses.

While the lender may not ask everyone to purchase PMI, there are some situations where the lender may ask the buyer to purchase this insurance policy to qualify for the loan.

Every lender is a little bit different; however, there are some trends throughout the industry. Most lenders ask the buyer to place a down payment of about 20 percent of the total price of the house. If the buyer is not able to put at least 20 percent down on a home, the loan is riskier for the lender. In this case, the lender may ask the buyer to purchase a PMI policy.

The Structure Of A PMI Payment

Typically, the PMI policy is paid in a monthly manner. It is included as a part of the total mortgage payment as the buyer pays the loan back to their lender. The positive news is that the buyer typically does not have to pay PMI for the life of the loan. Once the equity in the home reaches about 22 percent, the lender typically terminates PMI. 

In some situations, the buyer may be able to contact the lender and ask for PMI termination at an earlier date. Some people can negotiate this percentage or time period in advance of taking out the loan.

The Cost Of Private Mortgage Insurance

In general, the cost of a PMI policy is dependent on the value of the mortgage loan. It typically runs somewhere between 0.5 percent and 1 percent of the total value of the mortgage loan. Therefore, this can raise the monthly mortgage payment by a significant amount.

For example, if someone receives a $300,000 loan from the bank with a PMI policy of 1 percent, the buyer will have to pay an extra $3,000 per year as part of their mortgage payment. This is an extra $250 per month on their total payment. For some people, this additional cost might make their dream house unaffordable. 

Therefore, whenever possible, buyers should try to work with their trusted professional mortgage lender and look at options to avoid purchasing PMI. Every lender is a little bit different when it comes to private mortgage insurance.

15
Oct
By First Rate Financial Group
Financial Reports

What’s Ahead For Mortgage Rates This Week – October 15th, 2019

What’s Ahead For Mortgage Rates This Week – October 15th, 2019Last week’s economic releases included readings on inflation, an essay from Dallas Federal Reserve President Robert Kaplan and the monthly consumer sentiment index. Weekly reports on mortgage rates and new jobless claims were also released.

Inflation Flat in September

Inflation did not change in September; August’s reading showed 0.10 percent growth, which matched the July reading. Falling gasoline prices caused the flat reading. Analysts said that cooling inflation may prompt Federal Reserve policymakers to cut the target Federal Funds interest rate range at their next meeting.

The core inflation rate, which excludes volatile food and fuel sectors rose 0.10 percent in September; analysts expected 0.20 percent growth based on August’s month-to-month inflation rate of 0.30 percent growth.

In related news, Robert Kaplan, President of the Dallas Federal Reserve Bank, said in an essay that he had no pre-determined plan for the Federal Reserve’s Federal Open Market Committee meeting at the end of October. He wrote, “I intend to avoid being rigid or predetermined from here and plan to remain highly vigilant and keep an open mind on whether further action on the federal funds rate is appropriate.”  

Mr. Kaplan cited a concern that he shares with other FOMC members over a pull-back in business spending that could impact consumer confidence and spending Mr. Kaplan wrote that he was “mindful about “asset bubbles” caused by investors seeking higher yields.

Mortgage Rates and New Jobless Claims Fall

Freddie Mac reported lower mortgage rates last week as the average rate for 30-year fixed rate mortgages fell eight basis points to 3.57 percent; the average rate for 15-year fixed rate mortgages fell nine basis points to 3.05 percent and rates for 5/1 adjustable rate mortgages averaged 3.35 percent and three basis points lower. Discount points averaged 0.50 percent for fixed rate mortgages and 0.30 percent for 5/1 adjustable rate mortgages.

First-time jobless claims fell to 210,000 initial claims filed and were lower than the expected reading of 220,000 claims filed. Analysts said that fewer first-time jobless claims indicated minimal threat of layoffs.

October’s Consumer Confidence Index rose to 2.80 points to an index reading of 96 as compared to September’s reading of 93.20 points. Analysts expected an index reading of 92.50 points.

What’s Ahead

This week’s scheduled economic news includes readings on homebuilder confidence in housing market conditions, Commerce Department readings on housing starts and building permits issued. Weekly readings on mortgage rates and first-time jobless claims will also be released.

11
Oct
By First Rate Financial Group
Real Estate

3 DIY Home Improvement Projects You Can Complete Before Thanksgiving

3 DIY Home Improvement Projects You Can Complete Before ThanksgivingIt’s the time of year when many people are making their holiday plans: booking travel, making shopping lists, and getting their home ready for guests. Hiring a house cleaner, having the carpets steamed, and buying new furniture ahead of the holiday season are all common, but what about completely updating a room (or two)?

It’s easy to think that home improvement projects are too expensive or will take several weeks or even months to complete. However, there are several simple, affordable do-it-yourself projects that can be completed in a weekend to give outdated rooms a fresh new look — in plenty of time to host holiday guests. 

Refinish Kitchen Cabinets The Easy Way

Painting cabinets is an excellent way to totally transform a kitchen. This fun budget-friendly project can be done in a weekend or spread out over a couple of weeks if necessary. With adequate preparation and attention to detail, the “new” cabinets will look great for years to come.

Minimal supplies are necessary for this project and there is no limit to the looks that can be created using different paint colors, stains, and seals.

Create A Shiplap Accent Wall

Arguably one of the most popular home decor trends is the rustic farmhouse look, and shiplap is at the center of that. Using basic tools that are likely already in the garage and some plywood from the local hardware store, it’s easy to create a unique shiplap wall and dramatically change the look of a room.

The most fun part about DIY shiplap is that it’s so customizable. Use reclaimed or pallet wood, paint unfinished planks, or try using boards cut to different lengths. 

Update Flooring With Vinyl Or Laminate

Replacing outdated flooring is perhaps the biggest bang-for-the-buck DIY project that can drastically freshen up a space. Changing the floors in even one room can have a tremendous impact on the look of the entire home. 

With so many budget-friendly options such as click-together laminate panels and peel-and-stick vinyl tiles, choose different looks for different rooms or go for one cohesive look throughout the house.

Giving a home an entirely new look doesn’t have to involve a complicated renovation project. Major home improvement stores and websites have step-by-step tutorials to make it as simple as a few coats of paint and some elbow grease.

If you are in the market for a new home or interested in refinancing your current property, be sure to contact your trusted home mortgage professional to discuss current financing options.