Mortgages | Southwest Florida Real Estate from Sandra Rubinstein

How To Eliminate Your PMI?

Published on April 2, 2017 by Sandra Rubinstein

PMI, Private Mortgage Insurance, is usually a financial obligation that your financial institution with whom you funded your Mortgage with will tack onto your mortgage if your down payment is less than 20% of the price of the home you purchased.

The PMI % will depend on the amount of the loan down payment and your credit history. It may run from 0.3% – 1.5 %+ of the original loan amount per year. But, the good news is, there are ways of eliminating this addition monthly premium-BUT you will need to meet the cancellation rules.

The most common pre-requisites are (1) that you can not have taken out a second mortgage on the property or (2) have not had an excessive amount of late payment delinquencies in the previous 2 years (3) the property has not declined in value.

Cancellation will automatically occur when the loan balance amortizes to 78% of the property’s value at the time the loan was secured. You cannot accelerate this process with extra payments.

Lenders are required to terminate your cancellation of PMI request if your loan balance reaches below 80% of the original value. It this case, you can accelerate the process with additional payments on the principal.

If Fannie Mae or Freddie Mac owns your mortgage the current rules apply to the current appraised value not the value at the time the loan was secured. Here you can apply for PMI cancellation after two years if the loan balance is no more than 75% of current appraised value. If after five years, you can choose to apply for PMI cancellation if no more than 80% of current appraised value. Your ratios will be lower if there is a second mortgage, if the property is an investment (non-owner occupied), if the property is not a single family or if you have had recent delinquencies. (Remember, this applies to Fannie Mae or Freddie Mac owned mortgages)

It is a certainly a good investment strategy to plan on trying to pay off the PMI on your mortgage loan as it may yield a considerable amount of cash flow back to you.

For Example: Lets say you are thinking of purchasing your SW Florida Home (I certainly would be happy to help you with that!)

Purchase Price: $275,000.00

Down Payment (15%) $41,250.00

Loan Amount: $233,750.00

Interest Rate: 4.0%:

Monthly Principal & Interest Payment: $ 1115.96

PMI (Private Mortgage Insurance): 66.18

Total Monthly Payment: $1182.14

A great Mortgage & PMI calculator may be found at:

www.GoodMortgage.com/Calculators/PMI.html

As always, it is best to speak with your financial advisor or tax expert to help guide you in selecting the best financial direction that will meet your needs.

Article sourced from “The Mortgage Professor” Jack Guttentag, PHD.

Should I Go To The Internet To Finance My Home Purchase?

Published on July 11, 2015 by Sandra Rubinstein

There is so much energy expended to find your “Dream Home”, right? So when your Realtor hands you a list of Mortgage Brokers and/ or Institutions you are relieved that this decision can be directed by your Agent. Not so Fast!

There ARE many benefits to “shopping around” & to include the On-Line Financing Companies in your evaluation process. This simple act may save you $$$ on fees and possibly even the interest rate. (By the way, your Credit Score is not negatively affected if you are shopping for a Mortgage; unlike a general Credit Inquiry)

Here are a few things to look for and tips on an internet Lender site.

1. Shop anonymously until the time you make your decision.

2. Deal only with sites that the lender will commit to or “lock in” legally on that particular day & not only the day you are contacted by the Loan Officer. (Lenders “set” their interest rates on a daily basis & some may adjust multiple times during the day) Look for sites that include wording such as- “as of” with a date and time stamp.

3. Deal only with sites that disclose not only the interest rate but the Lender’s fees referred to as “Points”. They appear as a percentage that translated to a $$$ amount. ARMS (Adjustable Rate Mortgage) should also disclose the loan’s Margin, Index & Rate Caps.

4.The price of your loan package will be determined by the Property’s Zip Code, Occupancy (Primary, 2nd Home or Investment), Loan Type, Down Payment, your Credit Score & whether you choose to waive Escrow. If the numbers you are given do not include the adjustments for the above factors-just move on.

This article was summarized from an article by Jack Guttentag, PH.D. Professor of Finance Emeritus at the Wharton School of the University of Pennsylvania.

Additional Information may be found online @ www.mtgprofessor.com
“How effectively can you shop at Multi-Lender Web Sites”

Tax Tips For The Homeowner: Prepaid Interest Deductions {Points} (Part 4)

Published on March 16, 2015 by Sandra Rubinstein

Home Mortgage Interest & Points (Prepaid Interest Deductions are reported on Schedule A of IRS Form 1040. Your Lender will send you Form # 1098 that will list the points you paid on the close of your loan or refinance. This amount also appears on the HUD-1 Settlement Sheet you received on the close or your loan or refinance.

1. Prepaid interest (points) are generally 100% deductible in the year that they were paid along with the interest you are charged throughout the year.

2. If you are opting to refinance (interest rates are at a all time low) & use the escrow in your home towards home improvements-any points paid are deductible in that same year.
a. If you are refinancing to get a better rate or a shorter term of the loan, or to use the monies for something other than home improvements (such as College Tuition) the points paid will be prorated over the life of the loan

Tax Tips For The Homeowner: PMI & FHA Mortgage Insurance Premiums (Part 2)

Published on March 11, 2015 by Sandra Rubinstein

Welcome to Part 2.

What is PMI? If you have a mortgage that has NOT been secured by at least a 20% down payment of the appraised value or sale price, your lender will require that the mortgage to be insured against the possibility of the default of the payments on the loan.

So how does this charge translate on your tax return?

1. On loans taken out from 2007 or later, you may deduct this monthly charge, that is part of your monthly payment, on Schedule A of your itemized return.

***Please note, unless Congress renews the deduction, 2014 will be the last year that this tax deduction will be eligible (Please check with your Tax Advisor for the status of the deduction)

a. If your adjusted gross income is more than $100,000.00 your deduction is reduced by 10% on each $1000.00 ($500.00 for individuals that are married but filing separately) example: if you are making $110,000.00 or more the deduction may not be claimed.

2. There are government insurance fees for loans funded by the FHA, VA & the Rural Housing Services agencies. Some of the fees may be paid in full at time of closing. As their deductions may be complicated and dependent on various contingencies & vary form agency to agency, it is best to consult a tax advisor or other professional resource.

Please check back for Part 3: Prepaid Interest Deduction

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