Things to Watch Out For With Mortgage Insurance

Things to Watch Out For With Mortgage Insurance When the sub-prime mortgage crisis occurred, the reason why many homeowners went into foreclosure was because they could not pay their inflated mortgages.


Since there may have been no insurance offered at the time, both the lenders and the homeowners suffered a loss.


Private Mortgage Insurance is primarily utilized for homeowners who are considered at high risk for payment.  It does not count toward a home’s equity, or provide any other benefit than ensuring that if a homeowner goes into default, both the lender and the homeowner are protected.


Private Mortgage Insurance  or PMI is being widely demanded by lenders today, especially if new homeowners cannot put up a down-payment of 20% or more, or if they are borrowing more than 8% of the market value of the home.


Keep in mind, however, that you are protected as a homeowner under the Homeowners Protection Act, or HPA.  It is important to know your rights as it pertains to PMIs.


According to the Federal Reserve, under the Homeowners Protection Act, you have the right to request cancellation of PMI when you pay down your mortgage to the point that it equals 80 percent of the original purchase price or appraised value of your home at the time the loan was obtained, whichever is less.


You also need a good payment history, meaning that you have not been 30 days late with your mortgage payment within a year of your request, or 60 days late within two years.


Your lender may require evidence that the value of the property has not declined below its original value, and that the property does not have a second mortgage, such as a home equity loan, taken out against the value of the property.


The Homeowners Protection Act also requires that: “For loans obtained on or after July 29, 1999, the HPA establishes three different times when a lender or servicer must notify a consumer of his or her rights.  Those times are at loan closing, annually, and upon cancellation or termination of PMI.


“The content of these disclosures varies depending on whether: (1) PMI is “borrower-paid PMI” or “lender-paid PMI,” (2) the loan is classified as a “fixed rate mortgage” or “adjustable rate mortgage,” or (3) the loan is designated as “high risk” or not.


At loan closing, lenders are required to disclose all of the following to borrowers:


* The right to request cancellation of PMI and the date on which this request may be made.

* The requirement that PMI be automatically terminated and the date on which this will occur.

* Any exemptions to the right to cancellation or automatic termination.

* A written initial amortization schedule (fixed-rate loans only).


Annually, your mortgage loan servicer must send borrowers a written statement that discloses:


* The right to cancel or terminate PMI.

* An address and telephone number to contact the loan servicer to determine when PMI may be canceled.


When the PMI coverage is cancelled or terminated, a notification must be sent to the consumer stating that:


* PMI has been terminated, and the borrower no longer has PMI coverage.

* No further PMI premiums are due.


The obligation for providing notice of cancellation or termination is with the servicer of the mortgage.”


PMI can be a significant amount of money every month, so know your rights and the rules on PMI, and keep track of your dollars and cents in these tough times.


Foreclosure Assistance to Help Save Your Home


For anyone who is undergoing a great deal of stress thinking that they might possibly lose their home due to falling behind on their mortgage payments, there are many options that could potentially save your home from foreclosure.

It is very important to seek foreclosure assistance available as soon as you think you are going to have a problem meeting a mortgage payment. Leaving it too late will remove many of your options.

One resource that you could utilize would be the many different online resources, where there is 24 hour foreclosure assistance available for people who are in need.

The online resources are government or nonprofit organizations which are available to everyone who is in need of assistance. They might even possibly be able to contact some of your creditors to discuss with them some type of payment plan, which could help you to manage your finances more appropriately.

The internet is truly the greatest place to locate all sorts of information about foreclosure, to educate yourself and know your rights.  Here at this site, we talk about foreclosure, and also the importance of having a budget which can help you formulate a plan for getting out of trouble with the mortgage company or bank.

In addition to looking up foreclosure information on the internet, Try going to the yellow pages on the internet or even in your home telephone book. Throughout the yellow pages you should be able to find more information about finding foreclosure assistance in the area which you reside in.

Another great resource for locating information about getting assistance with your foreclosure is right at your local library. Visiting the library regularly is a really good idea anyway because it is a good way to get access to new reading material, books and information, plus the internet, inexpensively. Let’s face it, everyone has to tighten their belts nowadays.

In the library you will have the opportunity to find many different resources about foreclosure assistance that could be very helpful to you. There will be advice in the self help section on budgeting, better money management, asset management, and even investing, which could be very beneficial for anyone in need of better financial advice.

But your first priority should always be to make sure you don’t end up homeless. No one wants that, certainly not the bank. They want the nice tidy income from the interest you keep paying them every month, which over 25 years adds up to a fair amount of money!

So, if you are in need of foreclosure assistance, put aside your pride and ask for help. Better to do it at the first sign of trouble and be prepared, than to hope things will get better and in the process make your situation worse.

Learning how to manage your money more efficiently will definitely be your first step in order to see how you can avoid foreclosure and make sure that you don’t ever get behind on your important monthly bills.  A good budget can also help you if you want to go to the bank with a plan on how you are going to make up the missed payment/s

It does not matter which resources you choose to gather your information from on foreclosure as long as it is current, reliable and trustworthy. Take the time to do the research you need on foreclosure and how to prevent it.  Take time to write out your budget.

Above all, come up with a realistic financial plan you can live with. You might not have the glamorous lifestyle you once had, but a few sacrifices here and there will be worth it if you get to keep the home you have invested time and money in, and can stop foreclosure before it ever happens.