Category: mortgage

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.

Basic Things That You Need To Know About Mortgage Insurance Protection

A lot of people do not get mortgage insurance protection thinking that this type of insurance policy is just an additional burden for them. This is rather unfortunate because getting mortgage insurance protection actually has more advantages than disadvantages. No, mortgage insurance protection does not only protect the lender. This type of insurance also benefits the borrower as well. To help you understand the importance of getting mortgage insurance protection, read on.

When To Get Mortgage Insurance Protection

Not all people are required by law to get mortgage insurance protection. For some people who can afford to pay large down payments of the home that they want to buy, this type of insurance policy may not be necessary. However, for people who are on a tight budget and would like to pay a lower down payment, this type of insurance policy is a must. Mortgage insurance protection is actually required for loan amounts that exceed 80% of the value of the home that you want to buy. If you are thinking of buying a home and you cannot afford to pay the 20% down payment, getting mortgage insurance protection is your ticket to getting that new home. This means that you can move into your new home by just paying a small fraction of the standard down payment amount.

The amount of insurance premiums will be computed based on your outstanding balance. For instance, if you pay 15 percent down payment on your home, the 85 percent outstanding balance on the price of the property shall be the basis for computing your insurance premiums. Yes, you need to shell out an additional amount of money for the mortgage insurance premiums but considering that you can get your new home for a lesser down payment; the extra amount of money that you pay for your insurance premiums is well worth it. Just consider the amount of money that you pay for your insurance premiums as part of your purchase price.

Is It Necessary For You To Pay Your Insurance Premiums In Advance?

Although it would be nice to pay your insurance premiums in advance, you are not required to do this. Most insurance companies will allow you to add the cost of your insurance premiums on your monthly amortization. To get some ideas as to how much insurance premiums you will need to pay monthly, ask your creditor and your insurance company to give you a breakdown of the amounts that you will need to pay monthly.