If you are being required by your bank to pay a mortgage insurance premium it is usually because for some reason the bank wants some extra security when you are getting the loan. Paying the mortgage insurance premium will make sure that the bank will offset any losses in where they are forced to foreclose on your loan. Not everyone is required to have or pay a mortgage insurance premium, but if your credit is at all risky you may be required to. There are ways you can avoid having to pay a mortgage insurance premium.
Steps To Avoid Mortgage Insurance Premiums
The first thing you want to do is get your credit in the best shape possible. Having a score on all three scores above 700 will almost certainly assure yourself of not having to pay any mortgage insurance premiums. Regardless of the bank or lender the typical mortgage insurance company will charge anywhere from several hundred to several thousand dollars a year in mortgage insurance premiums. This number will be based directly on the value of the home compared with your credit rating. By having as high a credit rating as possible you can make sure that you are maximizing your investment. If you have past bankruptcies and foreclosures on your credit report you are more then likely going to have to pay some kind of mortgage insurance premium. They key is to try to get it as low as possible.
The other thing you can do to make sure that you do not have to pay this premium is to have a significant amount of money to put down. For the most part it is required that you have at least 20% down to avoid having to get mortgage insurance. This will put the loan and mortgage in a favorable loan to value ratio that makes it acceptable for banks to issue the loan without insurance.
In addition in some cases you will not have to pay mortgage insurance for the entirety of the loan. You can avoid payments of the insurance by getting the amount owed below that 20% threshold. Before you sign anything for your mortgage or mortgage insurance make sure you know all of the conditions and have in there plans to change them or switch out as the loan value gets to a more acceptable level. Taking the proper steps in the beginning cans save you thousands and tens of thousands of dollars over the term of the loan.
More Related Posts: