There are a number of reasons why you might need mortgage insurance in Tooele UT. No matter the reason or reasons why, if you find your home loan requires mortgage insurance you can know that, it’s going to cost you money.
Either its going to cost $$$$$
- up front,
- as an addition to your regular payment
- Often BOTH!
If that happens to you, we recommend that you see if you are eligible for a different loan. This post is not designed to give you loan information, or tell you how to get a loan on your Tooele house. I just want to give you some thoughts about the product and let you know what you need to be thinling about when you apply for a loan in Tooele Utah
Mortgage insurance is a large enough commitment for such a significant period of time that we suggest that if your current lender does not have options for you, contact another lender to see if they have a loan package that you qualify for without MI.
Do You Need Mortgage Insurance ?
Let’s Take a Look
Finding a proper mortgage loan and understanding the processing procedures behind the loan is the basis of good research. In Tooele County, the down payment on a mortgage loan is typically significant when dealing with mortgage insurance. Most loan applications with less than 20% down payment are required to include mortgage insurance with the loan. However, mortgage insurance may still be required even if it’s not typically required by your lender.
Most home mortgage applications undergo a strict set of standards for approval. These standards are known as underwriting and make up the bulk of time spent on a mortgage application. These underwriting standards are the main reasons why you might need mortgage insurance in Tooele UT.
Unique situations in employment or credit history may require an additional down payment percentage to avoid PMI or private mortgage insurance. Most underwriting requirements require adequate information on the borrower’s credit and employment history for complete application. Self-employed individuals or those with alternative forms of credit may need a few additional hoops to jump through when dealing with mortgage insurance requirements.
Lender-paid Mortgage Insurance
Lender-paid mortgage insurance is a popular option with potential homeowners that seek to avoid the cost of a PMI or FHA-backed insurance on a home loan. Most lenders incorporate payment of private mortgage insurance in exchange for a slightly higher interest rate. This is one example of the points system on a mortgage application that eliminates the cost of PMI. The increase in interest rate may or may not warrant the need for a lender-paid mortgage insurance arrangement.
Some loans allow elimination of the monthly PMI when thru either the equity thru appreciation or payment pay downs achieves a 20% loan to value ratio. Others do NOT allow for an increase in value but have a set time limit that automatically stops the obligation. That time corresponds to the time at which thru principal reduction, 20% equity is achieved.
What’s Involved With Risk Assessment?
Strict lending requirements and banking policy now limit the number of mortgages with zero down payment options. Conventional mortgages and FHA both require private mortgage insurance if it is less than 20% down payment. However, FHA loans can be more flexible with the initial down payment requirements with adequate credit. FHA mortgage costs are now for the life of the loan. Lenders will look at mortgage insurance as risk protection.
The risk protection process may or may not require mortgage insurance in your home loan. For example, VA and USDA 100% financing loans, (still available in Tooele County) do not usually require mortgage insurance if the borrower’s credit and employment history are adequate.
Conventional loans have a reduction in risk once there is at least 20% equity in the home compared to the principal of the mortgage. Don’t hesitate to contact a mortgage professional about potentially dropping mortgage insurance in the future to reduce overall loan costs. If you need a referral to a good mortgage professional in Tooele County area, give me a call, Berna Sloan 435-840-5029. We know a few that over the years have never failed us or our clients.
Wan’t more info on lending in Tooele UT? Check out my blog to see what I have written about home mortgages in Tooele County.
Or you can give me a call and ask me why you might need mortgage insurance in Tooele UT.