Mortgage Insurance: 4 Facts I Need to Know

Most borrowers have a lot of questions in relation to mortgage insurance. What is mortgage insurance? How could you avoid mortgage insurance? What kinds of loan need mortgage insurance? This are commonly asked questions. Well, this is not bad though since this is one of the terms used for the fess you would be paying which is included in your monthly fees after getting the keys to your home. mortgage insurance

There are 4 important things you should know about mortgage insurance:

Mortgage Insurance is for the benefit of the Lender

Mortgage insurance is required when you pay lesser than 20% in your down payment. Now this payment is done upfront and monthly. This is asked to ensure your mortgage, which means in case of default the mortgage insurance company would agree to pay the lender for any loss.

This is not collected for any loss on your part once there would be a default on you loan; this is to protect the lender for any loss they would encounter.

Mortgage Insurance Becomes a Requirement Depending on the Kind of Loan Applied For

For FHA loans, mortgage insurance is needed when the equity is less than 20 %, however for other sorts and types of loans no mortgage insurance is needed. This is applicable for conventional loans, VA loan and USDA loan. For conventional loan, once the mortgage goes beyond 80% of the equity, mortgage insurance is needed and for purchase, this requires a 20% down payment.

Lender Paid Mortgage Can Be an Alternative Option

A lender paid mortgage can be offered by your lender, this means you are not paying for an upfront payment and monthly insurance but your interest rate would be higher. Usually, the payment on these kinds of loan is much lower than both with Private mortgage Insurance or a no Mortgage insurance loan. Also, this could be very advantageous if you are planning to refinance you current mortgage after few years.

You will Stop Paying for a Mortgage Insurance at Some Point of Your Loan

Usually, if your down payment ranges only from 3.5 to 5 %, then you need to pay for mortgage insurance. However, in a certain point in your loan, you will reach the 20%, or your remaining balance would be less than 80%. By this time you can stop paying your monthly mortgage insurance payment.

Once you noted that your balance is less than 80% already, you can call your loan officer or directly to your lender about the information and have your mortgage insurance cancelled.

It is always advisable during the processing of your application to speak with certain terms offered by your lender about mortgage insurance for you to be able to save money. Lenders offer certain terms in paying your mortgage insurance, just be wise on choosing what to qualify for.


2013: The New Market and Buyers-What a Seller Should Know

Everyone has observed that there is an increase in the real estate activity in many parts of the nation. For a couple of months now, people in the market and in the industry have been talking about how the3 consumers have developed a positive outlook in buying and that they are back in the mortgage game; how it has been cheaper to own a home than to rent one; and that sellers have found a market for their homes which they have though would be impossible to sell.

If you are planning to sell your property, it would be better to understand how the mind of today’s buyers’ work, to completely understand what they experienced and the limitations on what they would agree to do and refuse to do to have their own home.

The Housing Crash Hit Them home buying

Those buyers may be old buyers, old persona in the mortgage scene, those people who have been a buyer long before the housing crash, planning to own a house during that time and didn’t go with the deal, some may have purchased a house that time and some may have lost their properties due to the crash. Whatever their role is during the crash, it would still retain the fact that they are experienced people, majority of them are those who decided to wait on the sidelines, and waiting on how low the prices and interest rates could go. They are wiser than you think. They are the buyers who went out from the waiting as they build enough confidence on the market.

Even New Home Buyers Are Well Informed

Really, new home buyers are not dull when it comes to mortgage. They could be young professionals, couples, oldies, but they are well informed. They are keen to information, just watching how the mortgage industry works, surfing the net for the recent conditions in the market, listening to what their friends could say about mortgage, very observant people who knew how the market goes up and down. They may be even aware how unstable the market is and have decided this is the best time to get the best deal.

They Trust the Market

May a buyer be new to the business or may be old and knows what to do and what they are doing, they share one common thing, they have re developed and re established trust for the market. They can be individuals, who have been renting for all these years and came across a mortgage calculator and decided to give it a try, or recently visited their banks and is encouraged by their to take advantage of the record low interest rates or even conversed with a friend who just bought a house.

They Already Formulated a Goal

These buyers have formulated one major goal in mind even before they have entered the market, it is already solid as rock. Whatever they have experienced before, these buyers for sure have heard how low interest rates are, how home prices are going to rise, and how their previous rent could go up. Now, all they are up to is to get in the trip, and they are no way they are going to miss this.

They are willing to Spend but They Know What they are doing

Buyers nowadays wouldn’t mind paying the cost just to close the deal and get the keys. Some might even take those small costs for granted, paying without the question as they know that they are saving a lot more than they have spent, however, these buyers can easily recognize a bad deal from a good one. Both experienced and inexperienced in the mortgage market have already gathered all the information they would need. And basically, they know what they are doing.

Goldman Sachs and Morgan Stanley Settles Mortgage Cases with $557 Million

Goldman Sachs and Morgan Stanley, both known American Multinational Financial Services Corporation are about to pay $557 million as a settlement to the complaints they have receive against all the wrongfully foreclosed homeowners who have lost their homes.

The deal that was made was made known to the public on Wednesday and is quite similar with the deals made by 10 major banks and mortgage service providers earlier this month. If combined, all 12 firms will be paying around $9 billion.

Goldman Sachs will lose $330 million while Morgan Stanley is to lose approximately $227 million in this settlement.

The deal they have made is seen to help a lot Americans who have lost their homes as banks made those automatic signing of foreclosure without even properly reviewing the documents. As this would be beneficial for those homeowners, this could help the bank lose all the hassles they are about to undergo due to the federal complaints that are filed against them.

Despite The turnout of  events, consumer advocates have  stated their concerns that the regulators have let the banks go off the hook so easily, as they settle for such low price which would not really compensate all the hardships those homeowners have went through because of those unreasonable foreclosure.

The settlement requires Goldman and Morgan Stanley to pay a combined compensation of $232 million in cash to homeowners to stop the review of loan files as what is required as action were undertaken by the Fed and the Office of the Comptroller of the Currency last 2011. There would be a remaining $325 that will be used to lessen mortgage balances and to forgive outstanding principal on home sales that are actually less than what the borrowers owed on their mortgages.

Almost 220,000 homeowners who have their homes seized in 2009 and 2010 are qualified for receiving payments from the settlement made by the two banks. The payment may actually range from hundreds of dollars until the maximum of $125,000 which would basically depend upon the intensity of the errors that was made.

 Goldman Sachs and Morgan Stanley have expressed their positivity as the matters were already settled.


The deal that was made can be compared to the past deal costing $8.5 billion announced with BofA, JPMorgan Chase, Wells Fargo and other huge banks.

These are not only the financial institutions that were charged against unreasonable foreclosures. HSBC and Ally Financial have been also required to do loan-by-loan reviews, and currently they are still talking with regulators about a similar deal but wasn’t able to make a decision yet.

Even settlements were made, this doesn’t end the issues about the housing crisis that fueled around 4 million foreclosures since resolving these millions of claims with numerous banks and mortgage service providers is very intricate as well as it requires more time, even longer than we think.