(Presseportal openBroadcast) - Private mortgage insurance (PMI) is how the lender can recover money in case the borrower defaults on the home-loan. The insurance paid by the borrower allows other purchasers a chance to receive a loan that may not otherwise qualify for the funding.
In the past, a mortgage would carry a minimum down payment of approximately 20% of the home's purchasing price. Simply stated, this was considered a loan commitment (defaulting was the loss of the investment). In case the borrower defaulted, the company could at least recover that amount by selling the home, after a foreclosure.
This has been readily available since the late 1950s. The PMI contract guarantees loans backed by the Veterans Administration, Federal Housing Administration, and the Department of Housing and Urban Development. The private mortgage insurance is available on conventional loans not backed by these authorities. [URL=http://www.shiftins.com/insurance/homeowners]Shift Insurance[/URL] states, “Loans guaranteed by these public agencies do not require PMI and instead levy their own insurance premiums on borrowers.”
The premium is usually part of the monthly mortgage payment; figured as a percentage of the outstanding principal amount of the loan (approximately 1-2%); then divided into twelve payments. The higher the loan-to-value ratio, the higher the percentage of the original mortgage amount will be.
According to the Homeowner's Protection Act of 1998, the borrower can request and receive a PMI cancellation when 80% of the home's selling price is reached. If a borrower is considered a 'high-risk,' the PMI may be charged down to a 50% loan-to-value ratio. If you don't understand this, your Shift Insurance agent will be glad to provide examples of how it works.
If you are in need of refinancing, your agent may see if you are eligible for the HARP refinancing program. This Home Affordable Refinance Program began in April 2009. It is also called the Obama Refi, DU Refi Plus, Relief Refinance, or A Better Bargain for U. S. Homeowners.
First, your loan must be backed by Freddie Mac or Fannie Mae. Secondly, your current mortgage must have a note date no later than May 31, 2009. You will not qualify if you have a USDA, FHA, or VA mortgage. Once again, your agent will further explain these programs.
Remember, you will be required to have private mortgage insurance if you do not have the cash for 20% of the down payment on your home. According to recent studies, in the fourth quarter of 2014, approximately one out of four borrowers was required to have the PMI. Those loans only had 3% to 15% of the down payment.
About Shift Insurance
The trained staff at [URL=http://www.shiftins.com/]Shifts Insurance Company[/URL] is ready to aid you in any type of homeowner's insurance plan you will need to remain in your home. California is known for its bad climate and circumstances that will make good coverage essential. The company's slogan says it all; “Feel safe at home with prices you can afford!”
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