Avoiding PMI - Private Mortgage Insurance

by Max Hunter

PMI - a recurring, monthly, unwelcome guest. It sounds similar to and is about as welcomed as a similar acronym. PMI is private mortgage insurance. This insurance policy is paid for by the homebuyer when the amount of their primary mortgage is greater than 80% of the value of the property.

You will note that the term 'primary mortgage' was used. This is for a specific reason. It is not the total of all mortgages and home loans on the property that is evaluated, but rather the amount of the primary or largest mortgage on the property that can trigger PMI.

PMI is calculated by taking 0.5% of your primary loan balance and dividing it by 12 (12 monthly payments). For example, if your primary mortgage is $200,000 and you are required to pay PMI, your mortgage payments would be an additional $83.34 per month. For most homebuyers, this additional premium is a considerable financial burden to undertake.

There are ways around PMI for those homebuyers unable to put down 20% or more on their new home. Mortgage lenders have created loan packages which include two or more home loans that when combined exceed the 80% threshold, while no one of the loans exceed that threshold. Typically there is a primary mortgage and either one or two home equity loans taken out simultaneously which are 81% - 100% (or sometimes more) of the home value. This affords the homebuyer to put less than 20% down, or perhaps put nothing down at all while at the same time eliminating the need to pay PMI.

If you know you are going to be putting less than 20% down on the purchase of your home you should immediately speak to your home lender about avoiding PMI. A good home lender will inform you about these types of packages. Though the rules on these packages may differ from state to state, the vast majority of states allow for these types of loan packages.

When you review this type of package you will note that there will invariably be a different interest rate on the mortgage than there is on the home equity loan(s). The mortgage rate may have a slightly lower interest rate or perhaps even a considerably lower interest rate. You should be able to calculate what the monthly payments would be for the combined loans and then determine if it comes out less than a single mortgage with PMI. Obviously, a good lender is only going to present you the package if the payments are cheaper than a single loan with PMI.

You are able to refinance the loans at any point and combine them into one payment. You would only do this when the value of the home is more than 20% above of the amount you will mortgage. As the value of your home increases through home improvements or time, you can receive an appraisal and speak to your home loan professional to determine if refinancing the loans into one loan makes sense.

These types of loans are often referred to as 80-10-10 loans or 80-15 loans, among other names. An 80-10-10 loan is a mortgage at 80% of the amount to be financed and than two home equity loans at 10% each. You will likely find that all three loans will have a different interest rate with this type of package. 80-15 loans are similar but would be the main loan at 80% and a secondary loan at 15% with the buyer putting down the additional 5%.

It is important to note that when financing 90% - 100% of a home, or more, the appraisal will play a key role in the loan approval process. If the appraisal does not come out at a pre-determined amount, the lender may feel that the transaction is not a sound one. You may need to go back and renegotiate the purchase price of the home or run the risk of being denied the mortgage. Most real estate contracts, however, do have a clause in them that allows the buyer out of the contract if they are denied a mortgage. You will want to speak to the lawyers and real estate agent in advance if you are planning for applying for this type of loan. Some contingency clauses in contracts specify a maximum percentage of a loan you need to qualify for and if you are denied for a loan at a higher percentage you are not protected by this clause.

It is important for you to have all of this information in place before you start your home search. By knowing how your financing is going to be handled you will be able to make sure you are protected in the transaction and you will also be able to negotiate a better deal since your financing has been completed or is close to being completed. The key is knowing in advance what percentage of the value of the home you are able to and willing to put down on your new home.

Max Hunter is the author of many credit related articles. If you are looking for help with Home Loans or any type of credit issue please visit us at http://www.homeloanave.com

For more News, Articles, Guides, Tips, Tricks and various Mortgage And Loan Products information... visit our site at http://www.mortgage-and-loan-info.com.

Mortgage Loans - Which One Is Right For Me?

by Dave Zwierecki

There seem to literally be thousands of mortgage programs out there so how do I know which one is best for me? Finding the right mortgage program to fit your needs and your financial goals can be difficult to do unless you are working with the 'right' mortgage professional and asking the 'right' questions.

Which mortgage program is right for me? This is a very common question asked by many consumers. There is no one answer fits all type response that can be given. Each and every individual person has their own specific financial situation and their own financial goals and dreams. With the number of mortgage programs out there to choose from being in the hundreds and maybe even the thousands, this can be a difficult decision trying to figure out what is going to be best for you. There are interest only loans, ARM loans, Pay Option ARM loans, balloons, fixed rate loans, extendable balloons, conventional loans, FHA loans, and many, many others to consider. Therefore, so what do I need to think about when choosing a loan program then?

Some of the main factors that you will want to consider when choosing which mortgage loan is right for you are: how long will you live in your home, do you have any children attending college currently or within the next few years, is this a starter home, will you have a pre-payment penalty, are you expecting any new family members to be added to your family, how much do you have in liquid assets, are you self-employed or do you work for someone, how much longer until you plan on retiring, do you have enough money for retirement, do you have many other financial obligations besides a mortgage, do you own any other property, and many, many others. Answering these questions, or at least thinking about them before you are ready to finance a home mortgage loan can help to greatly improve your chances of finding the right mortgage loan to meet your demands.

A fixed rate mortgage is always going to provide the most stability in the long run, however since most Americans sell or refinance every 4.6 years a fixed rate does not always make the most sense. An ARM loan can provide a cheaper payment and a lower interest rate upfront for a certain number of years, but there is a lot more risk involved obtaining an ARM loan because of the uncertainty of what will happen after the fixed rate period expires on the ARM. Interest only loans are good for real estate investors and consumers who need the flexibility of being able to make only the interest portion of the monthly payments. Pay Option ARM loans can be a great way to maximize cash flow, especially for self-employed and commissioned borrowers. However, Pay Option ARM loans can incur negative amortization, which is when your balance increases instead of decreases. There are a lot of items that you need to make sure that you understand before entering into a Pay Option ARM loan. FHA loans are usually better for homebuyers, especially first time who may not have the best credit or the best overall financial situation.

Thus, find a good mortgage professional and keep him or her for the rest of your days. The more you work with one person the more familiar they will be with your situation and be able to understand where you are coming from and where you want to go. This will help to insure that you find the proper mortgage loan for your situation.

Dave Zwierecki is a licensed mortgage professional with First Security Financial Services and has over 10 years of experience in the credit and mortgage lending fields. For more information, or to learn more, please visit: http://www.gofirstsecurity.com or for more information on mortgage loan programs visit: http://www.nomoneydown123.com/Florida/mortgage_programs.htm

For more News, Articles, Guides, Tips, Tricks and various Mortgage And Loan Products information... visit our site at http://www.mortgage-and-loan-info.com.

Discover The FOUR Essential Questions You Must Ask While Shopping For A Mortgage

by Ed Bisquera

How can you be sure you’ve got the right mortgage broker as you shop around?

First: make sure you are working with an experienced, professional loan officer. The largest financial transaction of your life is far too important to place into the hands of someone who is not capable of advising you properly and troubleshooting the issues that may arise along the way. But how can you tell?

Here are 4 simple questions your lender ABSOLUTELY must be able to answer correctly. If they don’t have the answers…RUN…DON’T WALK… RUN…TO A LENDER THAT DOES!

1. What are mortgage interest rates based on?

(The only correct answer is Mortgage Backed Securities or Mortgage Bonds, NOT the 10-year Treasury Note. While the 10-year Treasury Note sometimes trends in the same direction as Mortgage Bonds, it is not unusual to see them move in completely opposite directions. DO NOT work with a lender who has their eyes on the wrong indicators.)

2. What is the next Economic Report or event that could cause interest rate movement?

(A professional lender will have this at their fingertips. For an up-to-date calendar of weekly economic reports and events that may cause rates to fluctuate, visit www.pdxloan.com/economicreport/ and join the weekly distribution list for MMG Weekly – this is a copy of a weekly newsletter on current Economic Reports.)

3. When Bernanke and the Fed “change rates”, what does this mean… and what impact does this have on mortgage interest rates?

(The answer may surprise you. When the Fed makes a move, they can change a rate called the “Fed Funds Rate” or “Discount Rate”. These are both very shortterm rates that impact credit cards, Home Equity credit lines, auto loans and the like. On the day of the Fed move, Mortgage rates most often will actually move in the opposite direction as the Fed change. This is due to the dynamics within the fi nancial markets in response to infl ation. For more information and explanation visit Google or research online further).

4. Do you have access to live, real time, mortgage bond quotes?

(If a lender cannot explain how Mortgage Bonds and interest rates are moving in real time and warn you in advance of a costly intra-dayprice change, you are talking with someone who is still reading yesterday’s newspaper, and probably not a professional with whom to entrust your home mortgage financing. Would you work with a stockbroker who is only able to grab yesterday’s paper to tell you how a stock traded yesterday, but had no idea what the movement looks like at the present time and what market conditions could cause changes in the near future? No way!)

Be smart... Ask questions… Get answers!

More than likely, this is one of the largest and most important financial transactions you will ever make. You might do this only four or five times in your entire life… but a reputable experienced mortgage broker does this every single day. It’s your home and your future. Choose someone who makes it their profession and passion, ready to work for your best interest.

Once you are satisfied that you are working with a top-quality professional mortgage advisor, you'll want to continue with the 5 rules and secrets you must know to “shop” for a home mortgage loan effectively. Visit http://www.PDXLoan.com for a complete report on the 5 mortgage shopping secrets.

Ed Bisquera has previously worked as an event planner, music producer and marketing consultant. He is a Mortgage Planning Consultant near Portland, Oregon for Mortgage Express, LLC and mangages http://blog.PDXLoan.com and home mortgage loan information site http://www.PDXLoan.com. Articles, interviews and consulting are available at 1-800-862-0784 ext 21.

For more News, Articles, Guides, Tips, Tricks and various Mortgage And Loan Products information... visit our site at http://www.mortgage-and-loan-info.com.

Quick Mortgage Tips For Home Loans, Equity Loans, Reverse Loans, Cash-Out Loans And Refinance Loans

by Chris Robertson

If you're considering a mortgage loan, you might be wondering what options are available. Today, there are many options besides the conventional methods of obtaining a mortgage. Whether you're applying for a home loan for a new home, a refinance loan, an equity loan, a HELOC, or a reverse loan, you should be aware of what each loan entails.

Buying a New Home

When buying a new home, you'll need to be approved for a new home loan through a lender, or ask the seller to finance the home for you. Before applying at a lending institution, research your options. Determine how much 'house' you can afford. Use online mortgage payment calculators to figure what the payments would be for different home loan amounts. Then, you'll know what price range you can shop within, and whether or not you can afford the payments. Remember, your income/debt ratio must fit within the lender's guidelines to qualify for a conventional loan.

Healthy and 'Not-so-healthy' Credit Scores

If you have an excellent credit score, then your income/debt ratio along with the investment capital you have available will be the main factors in determining home loan availability. However, if there are flaws in your credit history due to non-payment or repossession, you will be limited in the type of home loan you can obtain. But don't lose heart. Many homebuyers whose credit is 'not-so-great' do qualify for non-prime loans. Non-prime loans can be a bit higher-priced than prime loans or have higher interest, but you might still be able to buy your dream home!

Creative Financing

Don't settle for conventional loans if you don't have to. There are many creative ways to finance a new home loan. If you do not have the needed investment capital or a down payment, some lenders will finance the down payment for you as well as the closing costs. If not, the seller might be willing to finance part of the loan to cover these costs. This can work even if the seller doesn't have extra 'money to lend!'

Explain to the seller that it could be advantageous to him because of income taxes. He might much rather claim an income of $100,000 than $120,000! Spreading out payments for $20,000 of the loan amount over a period of five or ten years could make a huge difference on his taxes due for that year. Consult with an accountant to find out if this could work in your situation.

Unusual Types of Home Loans

If you're worried about budgeting with a new home loan payment each month, try a FlexPay loan where several monthly payment options are available to you every month. These options include interest only payments, full-amortized payments, and minimum payments. There are also bi-weekly mortgages for paying more toward your premium each year through a bi-weekly payment schedule.

Hard Money loans are also available when there is a large amount of equity built up in a home. The loan approval is based more on the home or property's value than the borrower's credit history or job/salary history.

Refinance Loans

If you plan to refinance your home, there are several options. A refinance means you are re-evaluating the terms, payments and interest of your loan. You might refinance to simply get the interest rate or payment lowered. Or, you might want to keep a little cash out for yourself as well. This is called 'Cash-out' refinancing. Cash-out loans are made when you want to refinance your home for more than is owed on it. For instance, you owe $60,000, but want to refinance for $80,000. You'll pocket the additional $20,000 to use for home repairs, remodeling or whatever else!

Reverse loans are available for those over 62 years of age who own their home free and clear or have much equity built into it. They can receive a monthly payment, a lump sum or a line of credit. This does not have to be repaid until the borrower moves or passes away. Then, the estate can be sold to pay the note.

Another option for leveraging your home equity is to create a HELOC (home equity line of credit) that is secured by the equity in your home. HELOCs can be used to pay debts, make purchases, or anything else. Be aware, however, that the interest rate can fluctuate monthly.

Now that you are armed with many options for obtaining a home loan or refinancing your mortgage, check with an online lender to find out what plan will work best for you. Use the available tools and calculators to do some budgeting on your own as well. You'll be moving in that new dream home in no time!

Chris Robertson is a published author of Majon International. Majon International is one of the worlds MOST popular internet marketing and internet advertising companies on the web. Visit their main business resource web site at: http://www.majon.com

To learn more about subjects like home loan please visit the web site at: http://www.1Stepfunding.com

For more information and informative related articles and links about this subject matter and content, please visit Majon's Real Estate directory: http://www.majon.com/directory/Real_Estate

For more News, Articles, Guides, Tips, Tricks and various Mortgage And Loan Products information... visit our site at http://www.mortgage-and-loan-info.com.