RE/MAX of Boulder Radio continues to keep the Boulder community and potential home buyers and sellers updated with the latest information regarding the real estate market. This week, RE/MAX of Boulder’s Duane Duggan interviews branch manager of Premier Lending, Trevor Bellows, about the possibility of removing mortgage insurance from your monthly payment.
Mortgage insurance is a type of insurance policy that protects a mortgage lender in the event that the borrower defaults on payments or is otherwise unable to meet the contractual obligations of the mortgage*. According to Bellows, home buyers will need mortgage insurance if they put less than 20% down as a down payment.
As the real estate market continues to shift with the seasons, recent market trends have allowed for appraisal values to go up while keeping interest rates low, which may encourage borrowers to look at refinancing their loan.
When Can You Remove Mortgage Insurance?
Duggan points out that myths of the past assumed that once the appraised value of a home fell below 80%, mortgage insurance would automatically be dropped. Bellows confirms that this is no longer the case.
Once you have 20% equity in your home, you will likely be able to create a situation where you no longer have to pay it. Your equity increases when values rise, the passage of time and regular payments makes your loan balance go down, or you make extra principal payments on your loan. Once you reach that magical 80% loan to value, you can refinance your mortgage without mortgage insurance. Please note that FHA loans made after June 2013 have mortgage insurance for the entirety of the loan.
Mortgage insurance varies between Conventional, FHA, USDA, and VA loan programs.
If you are currently paying mortgage insurance and you do not know what the value of your home is, call The Boulder Property Network Team at RE/MAX of Boulder today for an analysis. Duane Duggan, Tammy Milano and Timmy Duggan with the Boulder Property Network can be reached at 303.441.5611 or BoulderPropertyNetwork@BoulderCo.com