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How to get rid of mortgage insurance without refinancing | Jabar Post Indonesia
A mortgage loan or, simply, mortgage (/ˈmɔːrɡɪdʒ/) is used either by purchasers of real property to raise funds to buy real estate, or alternatively by existing property owners to raise funds for any purpose, while putting a lien on the property being mortgaged. The loan is “secured” on the borrower’s property through a process known as mortgage origination. This means that a legal mechanism is put into place which allows the lender to take possession and sell the secured property (“foreclosure” or “repossession”) to pay off the loan in the event the borrower defaults on the loan or otherwise fails to abide by its terms. The word mortgage is derived from a Law French term used in Britain in the Middle Ages meaning “death pledge” and refers to the pledge ending (dying) when either the obligation is fulfilled or the property is taken through foreclosure. A mortgage can also be described as “a borrower giving consideration in the form of a collateral for a benefit (loan)”.
Mortgage borrowers can be individuals mortgaging their home or they can be businesses mortgaging commercial property (for example, their own business premises, residential property let to tenants, or an investment portfolio). The lender will typically be a financial institution, such as a bank, credit union or building society, depending on the country concerned, and the loan arrangements can be made either directly or indirectly through intermediaries. Features of mortgage loans such as the size of the loan, maturity of the loan, interest rate, method of paying off the loan, and other characteristics can vary considerably. The lender’s rights over the secured property take priority over the borrower’s other creditors, which means that if the borrower becomes bankrupt or insolvent, the other creditors will only be repaid the debts owed to them from a sale of the secured property if the mortgage lender is repaid in full first.
In many jurisdictions, it is normal for home purchases to be funded by a mortgage loan. Few individuals have enough savings or liquid funds to enable them to purchase property outright. In countries where the demand for home ownership is highest, strong domestic markets for mortgages have developed. Mortgages can either be funded through the banking sector (that is, through short-term deposits) or through the capital markets through a process called “securitization”, which converts pools of mortgages into fungible bonds that can be sold to investors in small denominations.
Getting rid of mortgage insurance is a great way to save money on your home expenses. The mortgage insurance premium does protect you in the event of an unfortunate foreclosure and is required on the vast majority of conventional loans with less than 20% down.
Mortgage insurance, sometimes referred to as MI or PMI will automatically cancel when you pay down your loan balance to 78% of the original purchase price or appraised value.
Getting rid of mortgage insurance can happen a lot sooner in an appreciating market or if you have made substantial improvements to your home that would increase its value. When interest rates drop many mortgage lenders immediately ramp up the messaging to past clients to refinance with one of the big reasons being the ability to getting rid of your mortgage insurance.
For FHA mortgages originated after June 3, 2013, the mortgage insurance premium will never go away on most 30 year fixed mortgages. Refinancing to remove mortgage insurance with an existing FHA loan to a conventional loan is definitely a great financial move for most people.
Refinancing a conventional mortgage to get a mortgage insurance really needs to be analyzed to make sure it makes sense. If you currently have a low interest rate mortgage and the only reason you want to refinance is to get the mortgage insurance, there may be a better option.
The first step is to know your exact mortgage balance and what that balance needs to be to eliminate your mortgage insurance. If you have your loan documents from when you originated this loan, there should be an amortization schedule included in the closing package. This should tell you what the target balance should be. If you don’t have the paperwork, just make a phone call to your existing mortgage servicer and asked them what the balance would have to be to eliminate your mortgage insurance.
The next step is to determine the approximate current value of your home. You can call your trusted loan officer or realtor and they should be up to give you an approximate value. You can also visit sites Zillow, Redfin, or Realtor.com to get an estimate of your home’s value. If the loan balance you currently have is less than 80% of your home’s current value, you should be able to request from your mortgage servicer a deletion of your mortgage insurance premium.
Call your current service provider and asked them their exact procedures and follow it to the letter. You’ll most likely be required to make the request in writing and you will most likely need to pay for an appraisal. This is the most inexpensive way to remove your mortgage insurance premium.
If you would like to talk about mortgage insurance premiums or would like to look at refinance options that might include home improvement loan, debt consolidation or simply reducing your interest rate, please feel free to give me a call at 214-945-1066 for your free no obligation mortgage check up.
Richard Woodward, NMLS 217454
Your Local, Direct, 5 Star Rated Mortgage Lender, Specialty Lending Manager
Office: (214) 945-1066
Service First Mortgage NMLS 166487
6800 Weiskopf Ave #200, McKinney, TX 75070
Licensed by the Texas Department of Savings and Mortgage Lending (SML) Mortgage Banker Registration. Service First Mortgage is an Equal Housing Lender. This is not an offer of credit or commitment to lend. Loans are subject to buyer and property qualification. Rates and fees are subject to change without notice. The views expressed on this site are those of the individual author and do not necessarily reflect the positions, strategies or opinions of Service First Mortgage or its affiliates.
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