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Mortgage Insurance

October 6, 2017 by Rebecca Guthrie

Real Estate 101: By the agent who lives here, plays here, owns here!

What does MI mean? Nope, not the state of Michigan! In the world of lending, MI is mortgage insurance. Does it protect you, the homeowner? No! It protects the lender in the case you default on your loan. Lenders have figured out that it costs 20% of the value of a home to liquidate, cover legal expenses, realtor expenses etc. if they take a home back in foreclosure. That’s why you pay mortgage insurance if you borrow more than 80% of your purchase price with a conventional loan. Good news it does go away! Paid in equity will cause it to fall off automatically. And possibly an appraisal (ask the servicer) will be enough a few years after purchase. This is not true of government loans like FHA and USDA. Those loans have mortgage insurance for life (with the exception of a couple instances with FHA). Both FHA and USDA also have an upfront premium that you will pay by adding it to the loan. VA has the upfront premium, unless you are disabled, but no annual premium. Private companies provide the insurance for conventional loans and the government has an insurance fund for each of FHA, USDA and VA. It might seem a high price to pay, to protect us only, but it really provides a huge benefit to buyers who don’t have the resources to put 20% down!

This information is provided by Wendy Paulus – Fairway Mortgage 970-668-1188

Filed Under: Uncategorized Tagged With: Get Advice, Selling

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404 Park Ave / P.O. Box 496
Kremmling, CO 80459
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