by: George Burks
If you borrowed more than 80% of the appraised value of you home, you're probably paying private mortgage insurance (PMI). PMI that is not lender paid is a waste of money. If you default on your mortgage, the private mortgage insurance provider will pay the lender, but you still would lose your home. PMI do not offer you any benefits whatsoever. PMI payments aren't even tax-deductible.
PMI increases your effective mortgage interest rate. On a $100,000 loan with 10 percent down ($10,000), PMI would cost you $43 a month. If you can cancel the PMI, you can save $516 a year and many thousands of dollars over the course of the loan. If your down payment was less, the cost of your PMI will be greater. If your down payment was 5%, ($5,000), your PMI expense would cost you $780 a year or $65 a month. Check your annual escrow account statement or call your lender to find out exactly how much PMI is costing you each year.
When you purchase a home and put down less than 20 percent down, most lenders will require you to purchase PMI. You are purchasing insurance to protect the lender if you default on the loan. The Homeowners Protection Act of 1998 establishes rules for automatic termination and borrower cancellation of PMI on home mortgages. These protections apply to certain home mortgages signed on or after July 29, 1999 for the purchase, initial construction, or refinance of a single-family home. These protections do not apply to government-insured FHA or VA loans or to loans with lender-paid PMI.
New borrowers covered by the law must be told, at closing and once a year, about PMI termination and cancellation. Mortgage providers must provide a telephone number for all their mortgage borrowers to call for information about termination and cancellation of PMI.
Even though the law's termination and cancellation rights do not cover loans that were signed before July 29, 1999, or loans with lender-paid PMI signed on any date, lenders or mortgage providers must tell all borrowers about the termination or cancellation rights they may otherwise have under those loans (such as rights established by the contract or state law).
The following applies for home mortgages signed on or after July 29, 1999. Your PMI must - with certain exceptions - be terminated automatically when you reach 22 percent equity in your home based on the original property value, if your mortgage payments are current. Your PMI also can be canceled, when you request - with certain exceptions - when you reach 20 percent equity in your home based on the original property value, if your mortgage payments are current.
One exception is if your loan is high-risk. A cash-out refinancing would be considered high-risk. Another is if you have not been current on your payments within the year prior to the time for termination or cancellation. A third is if you have other liens on your property. For these loans, your PMI may continue. Ask your lender or mortgage provider (the company that collects your payments) for more information about these requirements.
The following applies for home mortgage signed before July 29, 1999.
You can ask to have the PMI canceled once you exceed 20 percent equity in your home. But federal law does not require your lender or mortgage service provider to cancel the insurance.
Some states may have laws that apply to early termination or cancellation of PMI - even if you signed your mortgage before July 29, 1999. Call your state consumer protection agency for more information about your state's rules. Contact your lender or mortgage provider to learn whether you're paying PMI. If you are, ask how and when it can be terminated or canceled. Fannie Mae and Freddie Mac, which buy home mortgages from lenders, also may have guidelines affecting termination or cancellation of PMI on home mortgages signed before July 29, 1999. Check with your lender or call Fannie Mae or Freddie Mac, for more information.
Copyright © 2005 My Big Fat Mortgage All Rights Reserved.
About The Author
George Burks of http://www.mybiweeklymortgagepayment.com has offered a biweekly mortgage payment plan with no enrollment fees since 1999. His interest in financial topics is varied and includes identity protection. Please visit our financial library.
|
Custom Car Covers For That Perfect Fit!
Custom Car Covers For That Perfect Fit!
by: Matthew C. Keegan
Bob Crowley and his wife, Teresa, were proud of their silver Honda Accord. Despite living in the city and parking their car right on the street, their ?98 Accord was nearly free of dings. The finish looked just as good as when they purchased the car. How could this be possible?
With kids playing stick ball, tight parallel parking, air pollution, and pigeons that frequently splattered cars up and down the street, no car was immune from the regular insults of urban living. For the Crowley?s it was no mystery: a custom fitted car cover was placed over their Accord whenever it was parked to give it maximum protection. For an investment costing less than two hundred dollars you can protect your car too. Please read on to discover all the advantages of utilizing a high quality car cover.
Without exception, a custom fitted car cover offers the best protection for any vehicle. With...
Custom Car Covers For That Perfect Fit!
Car insurance > Custom Car Covers For That Perfect Fit!
Life Insurance Scenarios
Life Insurance Scenarios
by: Ivon T. Hughes
Most individuals have some form of insurance, whether it is for their vehicle, home or health. But it is important, however, not to overlook the benefits of life insurance, which pays money to beneficiaries when the insured dies.
HOW LIFE INSURANCE WORKS
Typically, the insured person makes payments into the plan - called premiums - in exchange for a "death benefit," the money that is paid at the time of death. If you are considering purchasing life insurance there are a few potential problems you need to be aware of.
DIFFERENT TYPES OF LIFE INSURANCE POLICIES
There are numerous types of policies you can choose, but life insurance policies generally fall into three categories - protection, long-term savings and estate conservation.
Many people purchase life insurance for the purpose of providing for their dependents in the event of their death, thus protecting your existing stream...
Life Insurance Scenarios
Car insurance > Life Insurance Scenarios
The Top 8 Ways to Save a Ton of Money on Your Auto Insurance
The Top 8 Ways to Save a Ton of Money on Your Auto Insurance
by: Matthew Keith
We all hate doing it, but it's something that we all must do at one time or another... the wonderful task of shopping for car insurance quotes!
Since there's no avoiding it, you might as well learn a few ways you can save money in the process. Here is a compilation of the top tips you can use to make sure you never overpay for your car insurance premiums...
1. Search for quotes regularly - Many people inadvertantly pay the same premium for years without ever shopping around. As your vehicle ages, it depreciates in value. You shouldn't pay the same premium on an older vehicle as you would on a newer one... think about it! It's generally good practice to do a quote search on a yearly basis, but the more often you do it, the better chances you have of getting lower rates.
2. If you have an older vehicle, consider "liability only" insurance - When making...
The Top 8 Ways to Save a Ton of Money on Your Auto Insurance
Car insurance > The Top 8 Ways to Save a Ton of Money on Your Auto Insurance
Buying Insurance
Buying Insurance
by: Jeff Lakie
Insurance is one of the most unpleasant purchases that we have to make - it takes its place amongst those few things we buy that we hope we will never actually have to use. Many people, in fact, use this hope to argue against purchasing insurance in the first place - and while the chances are that we might never need it, this is one of those times in life when it is better to be safe than sorry.
As the expense of daily life continually mount, it can be easier to see the non-immediate need for insurance as illusory. I'm not sick now, am I? My house is fine - it doesn't look like tornado weather out there today. That will never happen to me - I'm not wasting all my hard earned money protecting against something that might never happen! Those insurance companies don't need any more money.
Unfortunately, this confidence is misplaced, as even the most intellectual of scholars cannot predict which one of us...
Buying Insurance
Car insurance > Buying Insurance