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PostHeaderIcon FHA – PMI Insurance

PMI stands for private mortgage insurance. PMI is simply a insurance for the lender to have, incase the borrower defaults on the loan. The clients that have PMI are the ones who own less than twenty percent of the property. If a client got into an eighty-twenty loan they most likely have PMI.  The way that a borrower can get rid of PMI is by refinancing once they own more than twenty percent or if their house apprises for more. For a client to get ride of PMI they need refinance and they need to have their LTV under the eighty percent mark to get away from PMI. If a client is purchasing a property and do not put twenty percent down this will mean that they will have PMI. PMI is a way that lender allow borrower to get a loan with out putting twenty or more percent down.

Refinance no cost is true, but the borrower of the loan will pay a slightly higher interest rate. The cause of this is because the mortgage company need give a higher rate compared to borrower who pays the closing costs. Typically, the loans have interest rates about 0.25 to .50 percent higher than other loans. The more interest is reworked as a yield spread for lenders, and it shows as a fund from which closing costs can be paid. The thought that many borrower have is “is no closing costs a good idea”? If you are planning to stay in the home for a short period of time than a no cost refi may be a good option for you. If you are planning to stay for a longer period of time than getting the lowest possible interest rates available would be a better option.

An FHA refinance is basically the same as a conventional refinance just that FHA requires to mortgage insurance. FHA loans are made to make housing more affordable for first-time homebuyers and those with low to moderate income. Also FHA only requires that a borrower puts down 3.5%. The mortgage insurance that FHA requires is because they take the higher risk loans. If a client is already in an FHA loan they can do a streamline, which mean that you’re doing a rate and term without and appraisal, credit check, etc. The best way to learn about what FHA has to offer is by calling a financial company and speak to a licensed loan originator.

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