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Kiss your mortgage insurance good bye

Wednesday, April 17, 2013 - Article by: SMcPherson - C2 Financial Corp - Message

The southern California housing market has been on a rising price trend over the past year like many other housing markets across the country. Southern California's median home price registered a sizable 19.6% pop in December 2012 when compared with the same month in 2011, to hit $323,000. The recent housing rebound came after foreclosures declined, housing inventory plummeted, mortgage rates hit record lows, and strong investor demand.

You might be asking, so what does the recent housing price surge have to do with my mortgage insurance (MI) premiums? Well if you currently have mortgage insurance it is because you had less than a 20% down payment when you purchased your home. If you purchased your home in the last few years there is a good chance your home is now worth a lot more than it was when you paid for it. If your home has appreciated to where you now have at least 20% equity in your house this might qualify you to have your MI removed.

Ways you can have your MI removed

1. Contact your loan servicer/ lender and inquire with them about what is required to have your MI removed.

In most cases you will have to pay for a new appraisal to prove to your lender that you have at least 20% equity. Do not pay for an appraisal until you verify with your loan servicer if you are eligible. Every lender has different policies regarding this.

Many lenders will require:

1) A written request for MI cancellation

2) A good payment history

3) You are current on your payments

4) An Appraisal

5) Verification that no other liens are on the property

Note: Mortgage insurance removal with your current lender / loan servicer can only be done on Conventional loans. However, FHA loans may require different requirements so it's best to contact your loan servicer for details.

2. Simply Refinance.

This might be the easier of the two options. Let's face it; your loan servicer/lender most likely wants you to continue to pay MI since MI protects their loan, so sometimes they make it difficult. There is a good chance that if you purchased your home over the last few years your interest rate is higher than what the current rates are. Therefore, you would have a dual benefit from refinancing..

1) Get rid of your MI

2) Lower your interest rate,

ultimately saving you a ton on your monthly payment. If you refinance you would also have to pay for an appraisal. However, many mortgage companies offer a low or No Cost loan option.

If you are interested in discussing more on this topic or if you have any questions please contact Senior Loan Consultant, Scott McPherson of C2 Financial Corp

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