Homeowners financing a home with less than 20% down payment are required to pay for mortgage insurance. While lenders must automatically cancel private mortgage insurance (PMI) when the outstanding loan balance drops to 78% of the home’s original value, many homeowners are unaware that they can request cancellation a little earlier; potentially saving them money!
PMI monthly costs vary, depending on the size of the down payment and credit score and can be expensive for consumers. The Homeowners Protection Act requires that homeowners have the right to request their lender cancel PMI once their loan-to-value has reached 80%; much sooner than waiting for it to cancel automatically at 78%. Homeowners that meet the required criteria could potentially save themselves money on their monthly payments.
The Consumer Finance Protection Bureau (CFPB) has been cracking down on mortgage servicers that fail to provide notice to borrowers or have “excessive delays” in processing borrower PMI cancellation requests. If eligible, borrowers can request a PMI cancellation by contacting their mortgage payment servicer.
Unfortunately, PMI cancellation does not apply to FHA or USDA government backed loans. They require payment of mortgage insurance premiums for the entire life of the loan. The mortgage insurance cannot be cancelled; instead, homeowners would need to refinance their loan into a conventional mortgage.
If you or your clients have questions regarding mortgage insurance or other home financing needs, don’t hesitate to contact us. Learn more about potential tax deductions on mortgage insurance premiums.
The recent National Association of Realtors 2015 Profile of Home Buyers showed 95% of first-time home buyers and 86% of repeat buyers financed their home purchase. Clients in the market for a new home can increase their chances of a successful home buying transaction by following some of these tips.
Check Credit Reports
Credit reports can affect a client’s mortgage rate and ability to qualify for home financing. It’s important they review their credit report for any errors and take measures to boost their credit score if needed. Homebuyers can always check their credit report for free here.
Get Pre-Approved for a Mortgage
Before clients start a home search, always meet with a mortgage lender to get pre-approved. It will not only strengthen their offer, it helps clients understand their buying potential and helps real estate agents define the field of eligible properties that they can afford. Know the difference between a pre-approval and a pre-qualification!
Boost the Budget
Beyond helping clients create a budget for a home within their range, consider also looking for ways that could help reduce some of the costs. Seller or lender credits or grant funds can help offset closing costs or help with larger down payment funds, possibly expanding their search options.
The average person moves 11.3 times in their lives so it’s also important that clients consider the resale value when looking at homes. While a client may purchase their home as a long-term investment, keep in mind that they may one day need to sell it.
Buying a home is a major financial undertaking. Summit strives to educate clients and referral partners on all aspects of a home finance to help alleviate concerns and ensure a smooth home financing process. Contact us today!
Are you new to town? Do you want to find out where the locals hang out? We asked our staff here at Summit Funding about their hang out spots and we wanted to share the top 10.
- The Rialto (Great Shows!) Tucson brings some of the best and also unique artists to this venue. The best part is the size, which allows for a very intimate feel! The worst seat in the house is about 50 feet away. It is just fun, and a Tucson must! – Celina Stude, Loan Partner
- Cup Cafe at Hotel Congress is probably my most favorite place on the planet! It’s soooo good! Three words BLOODY MARY BAR! Every Sunday the Cup Café serves up the best breakfast This hotel is a big part of Tucson’s history.- Conner Sohns, Loan Officer
- Barrio Brewing Co. is what you would call a hidden gem. The building is next to a railroad and looks industrial, I really dig it!! I love checking out the UofA games and trying the new beers that they have on tap. – Dan Ford, Processor
- Rocks and Ropes is an indoor rock climbing gym. I went as a first time climber, and I had so much fun that I now go twice a year with friends. – Krystal Fountain, Loan Partner
- Prep and Pastry is hands down the best place to have brunch. The staff is on point, and always friendly. They sell out of space quickly but it is so worth it. Make sure you try the mimosas. – Ana Garcia, Business Development
- Maracana Indoor Sports Arena is the home of two amazing indoor soccer fields. You don’t have to be in a league, you can play in a “pick-up” game for only $5. – Derrick Polder, Senior Loan Officer
- Roadhouse Cinemas is the only movie theater in Tucson where I can have a Lazy boy style recliner, a cocktail and a bowl of nacho chips while I watch my favorite box office movies. -Kyle Taylor, Loan Officer
- Penca is the place to go if you want authentic Mexican food. I always order the carne asada tacos and the tortillas are always fresh, soft and obviously delicious. This place is authentic and a great date night. – Alex Pacheco, Loan Partner
- Reilly Craft Pizza & Drink is the bee’s knees! The pizza is amazing and they have three separate bars. Bar number one is inside the restaurant. Bar number two is down in the basement and reminds me of a speak easy. Bar number three is the beer garden outside. – Padraic Macoby, Loan Partner
- R Bar is so trendy and the décor is modern. The bar is all Red, hence the name. They have some very original cocktails and they play classic movies on the wall. I is a hidden location but a cool hang out. – Leticia Armenta, Greetings Partner