Get Rid of PMI Forever

PMI (Private Mortgage Insurance) is the biggest waste of any homeowners money ever in the entire universe and you need to get rid of it.

What is PMI or MI?  Isn’t it insurance on the house?  Doesn’t it benefit me as a homeowner?

PMI is insurance for the benefit of the lender.  Basically what it does is protect the lender against loss in case you stop making your payments and they have to foreclose.  They can then file a claim with the insurance company to cover their loss.  In some cases it covers more than their loss.  In that case it would benefit the lender to foreclose.

Think about it.  If the lender is covered for 125% of their loss, when they foreclose on someone, not only do they get their property back but any money they lost, let’s say $100,000, from the balance of the loan, they will get paid $125,000.  So, essentially the bank makes more money on foreclosing on you than if they were to work out a deal.

Now that being said there is tons of pressure on the banks to try to work things out but in the end they have a business to run.

So why else is Mortgage Insurance bad for the homeowner?

• It is an expense that as a homeowner you will NEVER ever see any benefit from.  It only protects the bank.
• While part of your monthly payment it does nothing to reduce your principal balance.
• In the case of FHA, it will remain in place for the entire life of the loan until the day it’s paid off in full (that’s just stupid)
• It cannot be written off on your taxes.

It truly is like throwing $200-300 or more into a fire each and every month.

The solutions:

• For FHA Loan holders with less than 20% equity, do an FHA Streamline Refinance.  This s super simple.  Requires no income verification and no appraisal.  You’ll still end up with Mortgage insurance but if you got a FHA loan in the last few years you likely have the higher mortgage insurance rate 1.35 in stead of the lower .85 rate.  This can reduce your payment significantly.
• For FHA or Conventional Loan holders with 20% or more equity, refinance into a conventional loan to ideally get a lower rate with NO MORTGAGE INSURANCE.  At the time of this post, rates are really low so for most people it is a great time to refinance.  However, even if you don’t reduce your rate or even if it increases slightly, you’re still in a better position by eliminating that unnecessary expense.

I don’t do loans myself anymore but I have an extensive background and can at least look at your situation, pull some comparable sales and see if it would be a good idea to refinance.  I’m happy to help.

Anthony, 714-900-2710