25
Apr
By First Rate Financial Group
Mortgage

How Do I Get Rid of PMI?

How to Get Rid of PMIHow to Get Rid of PMI?

PMI (Private Mortgage Insurance) is a type of insurance that lenders may require borrowers to pay if they have a down payment of less than 20% of the home’s purchase price. The purpose of PMI is to protect the lender in case the borrower defaults on the loan. However, once you have paid off enough of your mortgage or your home has appreciated in value, you may be able to get rid of PMI. Here are some ways to do so:

Pay down your mortgage: If you make extra payments on your mortgage or pay more than the required monthly payment, you can build equity in your home faster and reduce the amount of PMI you have to pay. Once you reach 20% equity in your home, you can request your lender to remove the PMI.

Refinance your mortgage: If you can’t afford to make extra payments, you may consider refinancing your mortgage to a lower interest rate. This could lower your monthly mortgage payment and help you build equity in your home faster. Once you have enough equity in your home, you can request your lender to remove the PMI.

Get your home appraised: If your home has appreciated in value since you bought it, you may be able to get rid of PMI by getting your home appraised. If the appraisal shows that you have 20% or more equity in your home, you can request your lender to remove the PMI.

Wait for automatic termination: If you have a conventional mortgage, your lender is required to automatically terminate your PMI when you reach 22% equity in your home, provided you are current on your mortgage payments.

Why Do Lenders Require PMI?

Lenders require PMI (Private Mortgage Insurance) when a borrower has a down payment of less than 20% of the home’s purchase price. The purpose of PMI is to protect the lender in case the borrower defaults on the loan. If the borrower defaults, the PMI will cover the lender’s losses up to a certain percentage of the loan amount, typically 20% to 30%.

Lenders require PMI because borrowers with less than 20% down payment are considered to be at a higher risk of defaulting on their mortgage. This is because they have less equity in the property, which means they have less of their own money invested in the home. If the borrower defaults, the lender may not be able to recover the full amount of the loan by selling the property.

PMI allows lenders to offer mortgages to borrowers with less than 20% down payment while still protecting themselves against the risk of default. Without PMI, lenders would likely require larger down payments, which would make it more difficult for many borrowers to qualify for a mortgage.

It is important to note that PMI is not the same as homeowner’s insurance, which covers damage to the property. PMI is solely for the benefit of the lender and does not provide any protection for the borrower. The specific requirements and procedures for removing PMI may vary depending on your lender and the type of mortgage you have. It is important to check with your lender to determine what steps you need to take to remove PMI.

24
Apr
By First Rate Financial Group
Financial Reports

What’s Ahead For Mortgage Rates This Week – April 24, 2023

What's Ahead For Mortgage Rates This Week - April 24, 2023Last week’s economic reporting included readings on home builder confidence and weekly reports on mortgage rates and jobless claims.

NAHB: Home builder confidence increases in April

The National Association of Home Builders reported that builder confidence in current housing market conditions rose by one point to an index reading of 45 in April. April’s reading was the fourth consecutive month showing increasing builder confidence.  The March and April index readings of 44 and 45 were the strongest since September 2022. A year ago the homebuilder confidence reading was 77.

Component readings for homebuilder confidence in market conditions were mixed. Builder confidence in current housing market conditions rose two points; builder confidence in expected sales over the next six months rose three points and builder confidence in prospective buyer traffic in new housing developments was unchanged from March.

The outlook for previously-owned homes was less clear. Robert Dietz, the chief economist for the NAHB, said: “Homebuilders are confident about future sales as buyers compete for the low inventory of available pre-owned homes.” Mr. Dietz also said that the shortage of previously-owned homes for sale was caused in part by homeowners not wanting to give up their current low mortgage rates.

Homebuilders are offering buyer incentives; 30 percent of homebuilders lowered prices on new homes by an average discount of six percent. Mr. Dietz said, “ Currently one-third of the housing inventory is new construction as compared to the historical norm of a little more than ten percent.” Mr. Dietz said that there is no evidence that pressure on the regional bank system has made the lending environment worse for builders and land developers.

Mortgage rates and jobless claims rise

Freddie Mac reported higher average mortgage rates last week. The average rate for 30-year fixed-rate mortgages rose by 12 basis points to 6.39 percent. Rates for 15-year fixed-rate mortgages rose by 22 basis points to 5.76 percent.

245,000 initial jobless claims were filed last week as compared to the expected reading of 244,000 first-time claims filed and the prior week’s reading of 240,000 first-time claims filed. 1.87 million continuing jobless claims were filed as compared to the previous week’s reading of 1.80 million ongoing claims filed.

What’s Ahead

This week’s scheduled economic reports include readings on housing markets and home prices. Data on new home sales and pending home sales will be published along with weekly readings on mortgage rates and jobless claims.

21
Apr
By First Rate Financial Group
Mortgage

Ensuring A Stress-Less Closing

Ensuring A Stress-Less ClosingBuying a home is an exciting and exhilarating time. Between the time your offer is accepted, and when you finally have keys in hand and you are ready to step into your new home, it can be stressful. The escrow period, also known as the closing, can take the most easygoing home buyer to the brink of insanity.

After you have negotiated your best price and come to an agreement, there are ways to make the escrow process less anxiety-provoking. Here are some tips from top real estate agents to help you get through the escrow process without losing your cool. 

Utilize Your Professionals

Trust your real estate agent to walk you through the entire process is key to a smoothly closing escrow. Rely them to do their job, but don’t be afraid to express any anxieties, and lean on them during negotiations and inspections. They are the experts, so ask questions and ask for advice, but try not to second guess their guidance or recommendations. 

Your additional trusted partner is your mortgage professional. They know how important the financing piece is to this equation and they will be sure to know your timeline and be available to answer questions and assist you throughout this process. 

Stay Organized

Chaos rarely inspires confidence. Stay on top of all paperwork and make sure you sign and return everything to your lender promptly to eliminate delays. The lender and escrow company want the sale to close in a timely fashion, too, so don’t slow them down by being disorganized or failing to return important documentation such as income tax information or bank statements.

Maintain A Healthy Perspective

No home is perfect, so be prepared for inspections that bring some daunting news. Ask to be present when the inspections are performed. The more information you have about your prospective home, the better you will be prepared to negotiate for repairs before they surprise you in the future. 

Ask for credits and repairs as needed, but try to remain objective. Some seemingly minor fixer projects can lead to a much longer time table. You may decide that, when considering the bigger picture and a timely transaction, a couple thousand dollars might not actually be a worth negotiating. 

Be Flexible

Retain as much flexibility as possible during the closing process and focus on the big picture, rather than all of the details. When opening escrow, ask your agent to give you an overview of the expected timeline from beginning to end. Knowing what to expect, and when as well as being aware of projected milestones goes a long way in reducing anxiety. You can, and should, ask to be notified when important milestones are reached.

While you might have it penciled in on your calendar, it’s common for closing dates to change. Instead of thinking of your closing date as set in stone, think of it as a flexible target. Do not book movers until the last minute, so you won’t be stressed if your belongings are all packed in a truck and the escrow date is set forward a day or two.

Don’t forget to breathe!

This is an important time to take care of yourself. Take a run, meditate, or do yoga. Read a book or enjoy a hobby. Moving can be a physically taxing event, so take the time now to relax before the big move.

Before you know it, you will be moving into your new home. Being informed, staying organized and taking care of yourself are key elements. Most important, though, is to rely on your trained professionals to guide you through this process and help to ensure a stress-less closing.