Home Values Have Gone Up – Can You Drop Your Mortgage Insurance?
Everyone is looking for ways to save money these days. With rampant inflation and soaring energy costs, everything is costing more than it was a year ago. The good news is that in most areas, home values rose along with everything else, and many homeowners have unrealized wealth sitting in their property. While it may not be the right time to sell and take the appreciation gain, there is another way to capitalize on the increase in home values. Often home buyers put less than 20% down on a new home. In this case, these borrowers were required to have private mortgage insurance (PMI). PMI is not homeowner’s insurance, that covers fire, theft, and other damage to the property. PMI is insurance that protects the lender in the event that the borrower defaults on the loan. On average, private mortgage insurance premiums range from about 0.25% to as much as 2.25% of the loan amount. The cost is dependent on two factors: the amount of the loan and the credit worthiness of the borrower. This additional fee is applied to the monthly payment. Yet, with rising home values, many borrowers may now have passed the 80% threshold and can ask to remove the PMI. The process for removing PMI varies from lender to lender but most will require a formal appraisal before removing the cost. FHA and VA have their own rules as well. But in this economy, removing an unnecessary housing cost can save many homeowners hundreds of dollars each month.
5 Tips For Writing A Winning Offer
Everyone recognizes that this is a difficult housing market for homebuyers. With inventory shortages and low interest rates, buyers have seen a fast-paced market with strong growth in home prices. As interest rates begin to rise, the pressure for buyers to settle on a new home and lock in their rate is even stronger. With so many buyers vying for the same property, it’s important to write the best offer right up front. Here are 5 tips to help you write a strong offer. 1. Show Financial Strength - You already know you need a preapproval letter but ask your lender to include an explanation about how they qualified you, bank statements, tax records, and underwriting review. 2. Include A Proof Of Funds Letter - Ask your lender to include a letter that indicates they have checked the funds needed for the close. 3. Larger Deposit - Earnest money is deposited into escrow and is applied to the buyer’s costs at the close. If you are serious about the home, offer a larger deposit that shows you have “skin in the game.” 4. Limit Contingencies - Real estate contracts have a lot of standard contingencies. Working with your agent, discuss them each in detail and remove any that aren’t necessary or don’t add extra protection. 5. Be Flexible - Make it easy on the seller. Offer a flexible closing date or leaseback option if they need more time. Consider offering a contingency to the seller that allows them to find their new home. Remember that even in this fast-paced real estate market, buyers are finding new homes. With a little strategy, you can find the right home for you and your needs.
What Does “Clear to Close” Mean?
One of the best things a homebuyer can hear is, “we have ‘clear to close.’” It’s one of the biggest milestones in the mortgage lending process and means the underwriter has cleared the application to move forward to document signing and close of escrow. While a critical stage for the sale, this is not the final step in closing on a new home. There are several things that can still affect the transfer of title. After the underwriter clears the file, the buyer will receive the closing disclosure. This is provided at least 3 days before the closing date and provides the final fees and costs. There shouldn’t be any surprises in the document, but the buyer must review and make sure the terms are acceptable. The close date will also be finalized at this time. Any discrepancy in the terms of the document and buyer’s expectations can still throw a wrench in the closing. Another step after “clear to close” is the final property walk-through. The buyers and their agent will walk through the home and make sure that the condition is the same as it was at the time of offer. They will also check for any agreed upon repairs. Finally, many lenders perform one more credit check and job verification on the day of the close. Any change can prevent the loan from closing. Typically, after a “clear to close” is issued, you can expect to close 4-7 days later. Understanding the steps to close will prevent misunderstandings and help buyers plan their move accordingly.
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