Mortgage Information
What is the importance of PMI in real estate business?
Real estate business is a highly specialized field that has its own set of terminologies. People who are not interested in purchasing or selling properties may not be aware of the terminology. One such term is private mortgage insurance (PMI). This insurance provides protection to the lender against non-payment in case the borrower [...]
Real estate business is a highly specialized field that has its own set of terminologies. People who are not interested in purchasing or selling properties may not be aware of the terminology. One such term is private mortgage insurance (PMI). This insurance provides protection to the lender against non-payment in case the borrower defaults on a home loan.
How does PMI help lenders?
The main benefactor of private mortgage insurance is the lender. Borrowers have to purchase PMI when they are unable to make the required down payment. A borrower does not get the freedom to shop around and purchase this insurance. It is their lenders who will choose the insurance provider for the borrower. PMI enable lenders to offer home loans even with low down payments as it protects them against loss in case borrowers default on the mortgages. Though the lender becomes the beneficiary, the borrowers pay the premiums.
How does PMI help borrowers?
To purchase a house with a conventional home loan, borrowers will have to put down 20% of the purchase price of the property. If they do not have sufficient funds to make the required down payment, they can still purchase the house by obtaining private mortgage insurance. So, with the help of PMI, borrowers do not have to wait for years to accumulate the required down payment for fulfilling their dreams.
How much does PMI cost?
The cost of private mortgage insurance depends on the size of the home loan and the amount that borrower make as down payment. Typically, the cost of the insurance is about half of 1% of the home loan. Borrowers generally have to be pay the premiums on a monthly basis, included in the home loan payment. Private mortgage insurance is very lucrative for lenders and so they are often reluctant to end it on time. Hence, the Homeowners Protection Act (HPA) of 1998 was enacted to automatically terminate PMI when borrowers attain 22 % home equity and also gives the right to borrowers to request lenders for its cancellation when they reach 20% equity in home.
Deposit Bridging No Money Down Investment
Jakob Austin from the UK writes our guest post today about different types of financing. This is very similar to our Rehab Financing that we use.
If deposits aren’t available as ready cash it is advisable to be able to borrow it. Bridging is of two types open bridging and closed bridging. In open bridging, lenders [...]
Jakob Austin from the UK writes our guest post today about different types of financing. This is very similar to our Rehab Financing that we use.
If deposits aren’t available as ready cash it is advisable to be able to borrow it. Bridging is of two types open bridging and closed bridging. In open bridging, lenders don’t know when the money will be repaid while in closed bridging they know it.
Closed Bridging or Deposit Bridging
It is offered as a secured short-term loan against any residential property. It requires Market Value lending where investment doesn’t come from a vendor but a third party. Deposit bridging, works well for individual resale properties. If the incentives are high enough it can result in a No Money Down investment but it is usually a Low Money Down.
Same Day Bridge and Refinance
Mortgage Express allows investors to buy a property at a net price, using short term bridging finance (24 hours). The investor immediately re-mortgage the property, based on the market valuation. It was an excellent product but has been withdrawn recently. You can still use the bridge and re-mortgage (http://en.wikipedia.org/wiki/Remortgage) system, but have to wait for 6-12 months to do the re-mortgage.
Open Bridging
In this Short and Medium Term Techniques are used for Low and No Money Down. Lenders fund short term finance up to 12 months. They will lend up to 70% of Open Market Value. Many lenders restrict the maximum borrowing to 85% of the cost, no matter what the open market value and the purchase price is. However if you pledge another property, you can borrow up to 100% including all costs. This would result in a true No Money Down deal.
Open Bridging is suitable for investment property with large discounts, new build and re-sales, auction property and distressed sales. However open bridging isn’t advisable as the cost of open bridging is high, obtaining discounts is difficult and the investor cannot commit on a mortgage 6-12 months ahead.
There are many sourcing companies in UK which advise investors on deposit bridging. Axis Property Investment (http://www.axispropertyinvestment.com/) is one of them and has built expertise over this domain. To know more about deposit bridging and other investment methods visit http://www.axispropertyinvestment.com/learn.html.
Summary: Deposit Bridging is becoming an integral part in a No Money Down investment. There are two types of bridging Open Bridging and Close Bridging.
Wells Fargo Pulling Out of Investment Property Loans (somewhat)
Wells Fargo announced last week that they decided to take the conservative approach with some of it correspondent channels and will no longer be purchasing some non-owner occupied loans in the secondary market. All retail departments and some correspondent channels will remain unchanged. Rob Bonahoom, with Cornerstone Mortgage, reports that this change may be a [...]
Wells Fargo announced last week that they decided to take the conservative approach with some of it correspondent channels and will no longer be purchasing some non-owner occupied loans in the secondary market. All retail departments and some correspondent channels will remain unchanged. Rob Bonahoom, with Cornerstone Mortgage, reports that this change may be a concern, by Wells Fargo, about mis-classifying some properties that could lead to RESPA violations. Read his article here at the Investment Property Mortgage Guy.
This appears to be further tightening of standards that Wells Fargo announced on February 27, in which they were pulling some loan products out of some markets and increasing down payment requirements in others. The February 27 report stated that underwriting standards are also being tightened in markets in Arizona, Colorado, Connecticut, Washington, D.C., Illinois, Louisiana, Massachusetts, Minnesota, Missouri, Nevada, New Hampshire, New Jersey, New York, Oregon, Pennsylvania, Rhode Island, Washington, Wisconsin and West Virginia, Reuters reported.
Why You Can’t Get Your Mortgage News From a Newspaper
OK. I admit it. I like to get a chuckle at the expense of others. Usually it is out of the stupidity of others. Just look at my list of Stupid Property Repairs! I am sure there is someone out there making fun of me, so I guess I reap what I sow.
I was reading [...]
OK. I admit it. I like to get a chuckle at the expense of others. Usually it is out of the stupidity of others. Just look at my list of Stupid Property Repairs! I am sure there is someone out there making fun of me, so I guess I reap what I sow.
I was reading this week’s Carnival of Real Estate and Dan Green’s post on The Mortgage Reports. He has a short example of why you should only be getting advice from professionals in the discipline. Dan found a news article in his local newspaper that had just glaring mistakes. Unfortunately, the unknowing public that reads this mis-information doesn’t know any better. Check out Dan’s post at The Mortgage Reports.
New Home Valuation Code of Conduct
Effective May 1, a new law was put into place nationwide in the mortgage industry called the Home Value Code of Conduct. (HVCC). Whether we like it or not, from this point forward, loan originators are not allowed to have any communication with appraisers regarding the value of a property. This includes “comp [...]
Effective May 1, a new law was put into place nationwide in the mortgage industry called the Home Value Code of Conduct. (HVCC). Whether we like it or not, from this point forward, loan originators are not allowed to have any communication with appraisers regarding the value of a property. This includes “comp checks”, purchase transactions and refinances.
All Banks, Mortgage Brokers and Mortgage Bankers are subject to this new law. When looking at properties, it will become more important than ever to properly assess the value of a property before making an offer so you don’t run into an appraisal issues. To read more about these changes, check out the details at Investment Mortgage Guy.com
Fannie Mae Now Offers Refinancing on Investment Property to 105% LTV
Rob Bonahoom wrote a great article about how Fannie Mae continues to loosen up its regulations to allow investors to help fix this mortgage crisis. They will now allow you to refinance your investment property out to 105% LTV. Read all the details at: Investment Mortgage Guy.com
Rob Bonahoom wrote a great article about how Fannie Mae continues to loosen up its regulations to allow investors to help fix this mortgage crisis. They will now allow you to refinance your investment property out to 105% LTV. Read all the details at: Investment Mortgage Guy.com
