Unexpected Expenses

Unexpected Expenses

TD Bank did a study concluding that sixty five percent of homebuyers with a required mortgage insurance claim that the monthly payment is higher than what they believed it would be.

Burnet Texas  home owners with a loan over eighty percent of the home value are required to have private mortgage insurance. On a $200,000 mortgage, the private mortgage insurance can raise the monthly cost by one hundred dollars and can raise the monthly payments on a FHA mortgage by two hundred dollars. Traditional loans have .5% to 1% premiums per year.

There are two components of a FHA loan. The first component is the up-front closing fee for the loan, which is 1.75% of the original mortgage that can be added to the mortgage amount or pain in cash at the time of closing. The other component of the FHA loan is an annual fee that ranges from .45% to 1.35% and is determined based on the terms of the mortgage and the original cost of the mortgage.

Lenders are usually required to cancel the mortgage insurance when the home reaches a value of seventy-eight percent of the original home value. This usually takes place between eight and eleven years of coverage. If the home is reappraised and has less than eighty percent of the value-to-mortgage ratio, the homeowner may petition the lender to cancel the insurance. Recently, the FHA has changed their requirements so that now insurance must be paid for the full term of the mortgage.

It is not impossible to avoid mortgage insurance – a minimum twenty percent down payment will do it. However, if that is undoable, the goal should be to relieve the need for the insurance and therefore making your life easier. Contact Tom Ashworth at (208) 830-7991 for more information about Burnet Texas  home mortgage insurance and your best option.

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