One of the insurance that home buyers to purchase houses for their loans through the bank, known as Hazard Insurance, commonly known as Fire Insurance. Hazard Insurance In addition, there is a another type of insurance, insurance for their debt by borrowing to buy a home with your house down when under 20%. The word expert called Mortgage Insurance, abbreviated as MI, also called Private Mortgage Insurance, PMI is the acronym.
With the customer to borrow money to buy houses, houses used to secure debt for less than they relieve, but can be reduced or damaged hao devaluate easily. Therefore, those who buy a home that Down less than 20%, with the people to borrow money to purchase insurance for their debt. In case a loan default (default), the insurer will indemnify. However, with the President must still collect and sell the house before, only insurance compensation classification La only. The big insurers are selling PMI Mortgage guaranty Insurance Corporation (MGIC), Triad guaranty Insurance Corporation, Radian guaranty Incorporated, GE Mortgage Insurance Corporation, United guaranty Insurance Corporation, and Republic Mortgage Insurance Corporation ... When people buy a home Down less than 10%, in addition to the PMI must be purchased, but the loan must close with the previous 6 months rent (Property Tax), 2-month money and Fire Insurance PMI 2. This amount is kept in a separate fund, known as Escrow Account. This amount will be refunded when the loan is exempt from paying PMI. And if one of the things like rent or insurance money increase, the loan will be more money to close the Escrow Account. So why have Escrow Account? The tape that the Down Payment is less opportunity to fail a lot, so the amount in Escrow Account is used to pay the "giùm" if people want to pay 3 months in late continuous (as with the President and only sold to the 4th if you do not receive the money only).
Because PMI is a significant amount of money that people borrow money to pay (can be from $ 80 to $ 150 per month), should have a few home with a program heard attractions, such as: "Down 10% - No PMI. There are actually down 20% below that PMI does not buy from? In fact this is only one way only say, a career in this program called the "Self-Insured" means the loans bear a higher cost for PMI is always money, is not no need for PMI .
However there are also a way we can copy that guideline called NO PMI loan is 2 set it at a time. The first loan is 80% of the cost, the second loan is the amount difference between the price, debt and money Down (this is how Down borrow more money with a bank), so we can say is Down 20% and be free of PMI.
Generally people borrow money to buy houses have questions about PMI insurance as follows: 1. PMI to buy Fire Insurance as feedback or just buy a year on loan only? - In principle, a loan, right from the start had to buy PMI, the purchase must forever until pay cut debt. But most of the houses in the same copy for our clients, to review the PMI removed.
2. So when can dress for the PMI? - There are many cases of people borrowing money after about 2 years to pay and the regular due date, the loan has been as good Credit for the tape, it can get for free is PMI. This simply written a letter requested by the review only. But this only a few houses with easy to accept.
- In case the second is that the number of remaining debt of their (Principal Balance) compared with the value of existing houses (Market Value) equal to or less than 80%, it would also free with the PMI to be. In this case, the loan must evaluate a house (Appraisal Report) to send the tape for review.
But not the tape is so easy. If PMI would not be free, then the convenience is low, may re-financing (Refinance) from PMI to also pay the lower.
Someone want to calculate, consider more cases must be PMI, the question is:
3. PMI should be purchased separately, or obtain more convenient to always include PMI (Self-Insured)?
- The answer is simple: If you buy individual PMI, then after a time, a loan can have an opportunity to apply for exemption with the PMI, the money is a higher cost to the PMI, called "Self - Insured ", it never would conveniently lower down unless re-financing. But choose to do by the communicative and calculation of each individual. Someone want to pay more for the tape to such tax, then the PMI is always advisable. Or Self-Insured may be booted Escrow Account; Qualified If not, you should choose to buy PMI instead choose Self-Insured with an higher, or want to keep the house long term or not, etc. .. Short, not always blindly purchase PMI, but each case varies by each individual to choose to buy or PMI is Self Insured and should discuss with professional real estate experience, the money will not be waste.
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