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Do you have to pay mortgage insurance premiums if your house appraises 20 percent higher than your loan amount?
Wiki User
∙ 12y ago
In general, the private mortgage insurance (PMI) threshold is based on the value of the house at the time that the mortgage is written. You can request to cancel PMI if you pay down the mortgage to 80% or less of the original appraisal value or the original purchase price, whichever is less. The law does not require lenders to consider later appraisals, but some may be willing to do so.
Wiki User
∙ 12y ago
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How do you calculate mortgage insurance premiums?
1. alculate the Loan to Value ratio (LTV). LTV = loan amount /total mortgage value, where loan amount = total value of mortgage --down payment on the property.If the mortgage value is $100,000 and the client makes a 10-percent down payment ($10,000), the loan value is $90,000. LTV ratio is equal to 90000/100000 or 0.9 or 90 percent.2. Determine the mortgage insurance rate. Rates are different for private mortgage insurance (PMI) and an FHA loan. In order to determine the correct insurance rate, contact the insurance provider. Generally, PMI insurance rates fall within the range of 0.5 to 1 percent. FHA loans require a premium of 1.5 percent of the loan value at closing; monthly premiums fall in the range of 0.5 percent of the loan amount. Contact the insurance provider to determine the correct insurance rate.3. Calculate the premium with the following formula: Mortgage insurance premium (annual) = LTV amount x mortgage insurance rate. Mortgage Insurance premium (monthly) = mortgage insurance annual premium / 12. For example, if the LTV is $90,000 and the mortgage rate is 1 percent, the annual mortgage insurance premium = $90000 x 0.01 = $900, and the monthly mortgage insurance premium = $900 / 12 = $754. Research the benefits, liabilities and costs of owning mortgage insurance. Mortgage insurance may be tax deductible. However, the cost of the insurance can be substantial on large loans. Generally, the insurance can be canceled when 20 percent of the loan has been repaid, but the terms vary according to the provider.
Is mortgage protection insurance necessary to have?
Yes and no, mortgage protection insurance is necessary to have. According to the Private Mortgage Insurance Law lenders who put less than a 20 percent down payment on there loans are required to pay private mortgage insurance or mortgage protection insurance.
What percentage deposit is required to avoid mortgage insurance?
ten percent
What percent of us homes have no mortgage?
According to the US Census about 70 percent of homes have a mortgage and 30 percent do not.
What percent of health insurance premiums can business deduct as business expense?
about 10-20% because of the off and on differences the health has. the 401(k) would most likely benefit from this.
How do you calculate mortgage insurance premiums?
1. alculate the Loan to Value ratio (LTV). LTV = loan amount /total mortgage value, where loan amount = total value of mortgage --down payment on the property.If the mortgage value is $100,000 and the client makes a 10-percent down payment ($10,000), the loan value is $90,000. LTV ratio is equal to 90000/100000 or 0.9 or 90 percent.2. Determine the mortgage insurance rate. Rates are different for private mortgage insurance (PMI) and an FHA loan. In order to determine the correct insurance rate, contact the insurance provider. Generally, PMI insurance rates fall within the range of 0.5 to 1 percent. FHA loans require a premium of 1.5 percent of the loan value at closing; monthly premiums fall in the range of 0.5 percent of the loan amount. Contact the insurance provider to determine the correct insurance rate.3. Calculate the premium with the following formula: Mortgage insurance premium (annual) = LTV amount x mortgage insurance rate. Mortgage Insurance premium (monthly) = mortgage insurance annual premium / 12. For example, if the LTV is $90,000 and the mortgage rate is 1 percent, the annual mortgage insurance premium = $90000 x 0.01 = $900, and the monthly mortgage insurance premium = $900 / 12 = $754. Research the benefits, liabilities and costs of owning mortgage insurance. Mortgage insurance may be tax deductible. However, the cost of the insurance can be substantial on large loans. Generally, the insurance can be canceled when 20 percent of the loan has been repaid, but the terms vary according to the provider.
Is mortgage protection insurance necessary to have?
Yes and no, mortgage protection insurance is necessary to have. According to the Private Mortgage Insurance Law lenders who put less than a 20 percent down payment on there loans are required to pay private mortgage insurance or mortgage protection insurance.
What percentage deposit is required to avoid mortgage insurance?
ten percent
The Value of Mortgage Insurance to All Consumers?
Many people do not realize the importance of purchasing a mortgage insurance policy. A mortgage insurance policy is even more important than the things that are in the home, considering if something happens to default the mortgage loan, the lender is protected. With mortgage insurance, the insurance company basically becomes the beneficiary in the case of any default against the borrower although the borrower purchases the insurance and pays the premiums. Also, many homeowners or buyers do not know that mortgage insurance is a necessity or requirement when it comes to getting any type of home loan to purchase a property. There are two main types of mortgage insurance, Private Mortgage Insurance and Mortgage Protection Insurance. With Private Mortgage Insurance or PMI, if a consumer doesn't hold at least twenty percent equity or cannot put a twenty percent down payment on the mortgage loan a PMI may become a requirement to get any mortgage loan. This is because the PMI is used to protect the lender against any loss in case of default. There is Borrower paid PMI which is where the consumer pays an insurance premium. There is also Lender paid PMI which means the lender pays for the PMI and the lender recovers any premium costs by adding it to the mortgage loan interest charges. The second type is Mortgage Protection Insurance. This type is available in the case that the consumer cannot make their monthly mortgage payments due to financial hardships, illnesses or injuries and other such issues. Within this category is Mortgage Life Insurance which covers the remaining amount of the mortgage loan in case of death. There is also Mortgage Disability Insurance that covers the consumer in the event that the person becomes physically disabled. This coverage usually only pays about fifty to seventy percent of the person's yearly salary towards mortgage payments. A consumer may also get a combination of Life and Disability Mortgage Protection, but it is wise to compare different policies and be knowledgeable of the policies before committing to them. In conclusion, Mortgage insurance policies are in place to protect the lenders but also have options such as the Life and Disability Protection policies to protect the consumer. In any case, every consumer should research the differences, ask questions about premium costs and coverage and not settle for merely one policy if the others may be available to them.
How do you avoid mortgage insurance?
Avoiding mortgage insurance usually requires having sufficient equity so the lender doesn't require it. Mortgage insurance comes in two major forms. Private mortgage insurance, or PMI, is provided by private companies on conventional mortgage loans with balances over 80 percent of the home's value. Mortgage insurance premium, or MIP, is required on FHA loans. FHA requires both up-front MIP and monthly MIP. Mortgage insurance may be tax-deductible, just like mortgage interest is.Sponsored LinkAmerican ExpressGain Access to Exciting Events With American Express. Learn More!americanexpress.com1Provide a down payment of at least 20 percent or ensure you have 20 percent equity in the home if the loan is a refinance. This is the most common way to avoid mortgage insurance. Lenders know that if they have to foreclose, they risk losing money when the home is sold if the balance of the mortgage is more than 80 percent of the home's value. The PMI covers the losses incurred by the lender.2Obtain a second mortgage instead of having one mortgage if your down payment is less than 20 percent. Only first mortgage lenders can require PMI on the loan. If your first mortgage is at 80 percent and you have a 10 percent second, your loan will not require mortgage insurance, even though the two loans combined are over 80 percent of the value. The interest rate on the second mortgage may be higher than the first, but the total payment may be less than if you had a loan with PMI.3Find a loan program that does not require mortgage insurance. Just because the loan amount is over 80 percent of the home's value, that doesn't mean that mortgage insurance has to be provided. Some lenders have programs that allow higher loan amounts and do not require mortgage insurance coverage. Usually the interest rate is higher to account for the extra risk these loans have.4Ask the seller to pay for a single premium PMI for your loan at closing. Your loan will still have PMI, but if the seller pays for it, you do not have to. These policies require one payment up-front and no monthly payment. Many lenders allow the seller to pay part of the closing costs, and this can be included in your closing costs.
How big is the insurance industry in the United States?
During 1992, over $276 billion, or 43 percent, of the $649 billion in non-life insurance premiums in the world were written in the United States
What percent of us homes have no mortgage?
According to the US Census about 70 percent of homes have a mortgage and 30 percent do not.
What percent of health insurance premiums can business deduct as business expense?
about 10-20% because of the off and on differences the health has. the 401(k) would most likely benefit from this.
Mortgage Insurance Doesn't Last Forever?
Lenders like it when people offer at least a 20 percent down payment when they apply for a mortgage loan. Those who do this can receive the lowest interest rates, because they are less likely to default on a mortgage loan than those who offer less than 20 percent. These people aren't considered to be as high a risk to lenders.Mortgage Insurance for Less Than 20 Percent DownSometimes, people don't have the means to give up 20 percent of the purchase price on a house and they offer less. This has been possible in recent years because the qualifications have been relaxed in order to place more people of limited economic means in their own homes. The dilemma is that lenders raise the amount of risk they take on when they accept this. One way to lessen this risk is to force clients who offer less than a 20 percent down payment to purchase mortgage insurance.What Mortgage Insurance InsuresA mortgage insurance policy, also known as Private Mortgage Insurance (PMI), insures the amount of the loan against possible default by the borrower. If the borrowers are suddenly unable to continue making the payments they agreed to give to the lender each month, the mortgage insurance policy will cover the lenders' loss.In recent years, many homeowners have defaulted on their loans and these houses have gone into foreclosure. The banking industry responded to this fact by tightening their requirements for qualifying for mortgages. Fewer people have been able to qualify for these loans because the lenders have begun to check their credit histories and require them to show proof of employment. People who are in the market to purchase a house will, most likely, need to purchase mortgage insurance in order to qualify for the loan now.The Times Mortgage Insurance Will No Longer Be RequiredPeople may be required to pay mortgage insurance in the beginning which adds to the overall cost of purchasing a house, but they can rest assured knowing that it won't last forever. Some lenders only require that their clients pay for mortgage insurance for one year. After the borrowers have managed to contribute enough money so that their equity is equal to 20 percent, they may ask the lender if they may forgo mortgage insurance.Some people may have to purchase mortgage insurance in order to receive the loan they need. With time, they can be relieved of this obligation while increasing the equity in their homes.
How much down payment one should pay 20 percent 40 percent or 60 percent of the purchase price of home?
It depends on where you live and how much you can afford. In general, it's a good idea to pay down your mortgage as quickly as you can. Current mortgage rates are at about 6.5%. Some people will advise you to invest that money in the stock market instead, given the historical returns of about 10%. However, if the housing market collapses, then you'll be out of both your home AND all your money. Put down as much as you can. In Canada, putting down at least 25% will exempt you from the CMHC insurance premiums, which add about $10k onto the mortgage. If you can, add an extra amount to your mortgage payments. Even an extra $100 a month will allow you to finish paying your mortgage off much faster as extra payments are applied directly to the principal.
Does an FHA loan have a PMI requirement?
Most FHA loans will require a PMI (private mortgage insurance) It will depend on the area from which you get the loan as to what percent you will have to pay upfront or how much to get.
What health reform legislation of 1996 provided a boon to health insurance agents?
Self-employed people would be able to deduct 40 percent of health premiums from their 1997 taxes; in 1998-2002 the amount would increase to 45 percent and gradually keep rising to 80 percent in 2006
