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Category: Refinance (Page 1 of 10)

Removing Mortgage Insurance: A Guide to Financial Freedom

Mortgage insurance is a common expense that many homeowners face, especially when they buy a house with a down payment of less than 20% of the purchase price.

Understanding how to remove mortgage insurance can really help in lowering your overall mortgage payment.

Let’s take a look at how to remove this financial hurdle and ultimately save money in the long run.

Understand the Types of Mortgage Insurance

Before diving into the removal process, it’s crucial to comprehend the two main types of mortgage insurance: Private Mortgage Insurance (PMI) for conventional loans and Mortgage Insurance Premium (MIP) for FHA loans.

Both serve the same purpose: to protect the lender in case the borrower defaults on the loan. PMI can be removed under certain circumstances, while MIP remains for the life of the loan for FHA borrowers.

Achieve 20% Equity

The key to removing PMI on conventional loans is reaching 20% equity in your home. Equity is the percentage of your home’s value that you own outright.

You can accomplish this in several ways, such as making extra payments towards your principal balance, making home improvements that increase its value, or waiting for your home to appreciate naturally over time.

Tracking your loan balance and property value will help you gauge when you’ve reached the 20% threshold.

Request PMI Cancellation

Once you believe you’ve achieved 20% equity, contact your lender to request the removal of PMI. They may require an appraisal to verify your home’s current value.

If the appraisal confirms your equity position, your lender should terminate the PMI premiums.

It’s essential to stay diligent and follow up to ensure this happens, as some lenders may not automatically remove PMI.

Refinance Your Loan

Another way to remove mortgage insurance is by refinancing your loan…and this is how you remove MIP from FHA loans.

If market interest rates are lower than when you initially purchased your home, refinancing could not only save you money on your monthly payments but also allow you to secure a loan without mortgage insurance if your equity position has improved. 

This is the option most used by homeowners.

In Conclusion

Understanding how to remove mortgage insurance is a crucial financial piece that can help you save money in the long run when you become a homeowner.

Achieving 20% equity and requesting PMI cancellation or refinancing your loan are two effective strategies to eliminate this extra expense.

Please do reach out to me today to discuss your current situation, as I’d be more than happy to discuss your options!

Big and Welcomed Changes Here For New FHA Loans

FHA mortgages have long provided first-time homebuyers and those with less-than-stellar credit an affordable way to achieve home ownership. But one of the main drawbacks of these mortgages has been that their mortgage insurance costs are relatively high.

Reduced mortgage insurance rates go into effect today for many FHA borrowers. The typical borrower will pay 0.55% of their loan amount annually in mortgage insurance costs (as opposed to the .85% rate previously) – a decrease of 30%!

The White House announced Wednesday that the US Department of Housing and Urban Development (HUD) will lower annual mortgage insurance premiums (MIP) on FHA mortgages. These loans are insured by HUD’s Federal Housing Administration.

Mortgage insurance is required on all FHA loans (regardless of down payment size) to allow for more flexible qualification requirements, like a lower credit score.

FHA mortgages are used for primary residences, not 2nd homes or investment properties.

Overview of the Changes

Mortgage insurance is paid as a percentage of the borrower’s loan amount, and how much an individual pays depends on how much they borrowed, their down payment, and the loan term. Currently, most borrowers pay an annual mortgage insurance rate of 0.85%.

To show the monetary value of this change, a borrower in a $265,000 home would save about $800 per year. A borrower with a $467,700 home – the national median home price in December 2022 – would save more than $1,400 annually, according to the HUD press release.

By reducing the costs for this type of loan, more people may be able to afford owning a home.

This is especially true for low-income and first-time home buyers, who tend to benefit from FHA loans the most.

This change is a welcome reprieve for Americans who, in the last year, have experienced higher home prices, housing costs and mortgage rates.

The Bottom Line

By reducing the costs associated with getting an FHA mortgage, HUD aims to make home ownership more affordable. 

Nearly 84% of FHA mortgage borrowers are first-time homebuyers, and 43% of FHA borrowers are low income, according to HUD.

Also, FHA mortgage rates are generally lower than conventional rates. So, it will be in buyers’ best interest to have a mortgage pro who can work with them to figure out which loan program would be the best for their current situation.  It wouldn’t surprise me to see conventional loan originations drop because of these FHA changes.

Where Can I Get More Information?

Contact me directly to discuss your current situation and how you might be able to take advantage of today’s FHA changes.  It would be my pleasure to help you!

Home Appreciation Continues To Accelerate

Good news on the home appreciation front…real estate valuations are continuing to increase at a rapid pace!

Check out these numbers…


The Case-Shiller Home Price Index, which is considered the “gold standard” for appreciation, showed home prices rose 1.2% in August and 20% year-over-year, which was unchanged from the previous reading.

This was the first time since early 2020 we have not seen a year-over-year increase, which means that we might have reached the height of annual growth and we will start to see those appreciation numbers slow a bit.

With that said, it’s not that prices are declining, they are just increasing at a slower rate.

As you can see above, Phoenix, San Diego, and Tampa reported the highest annual gains.


The FHFA (Federal Housing Finance Agency) released their House Price Index, as well. This measures home price appreciation on single-family homes with conforming loan amounts. 

Home prices rose 1% in August of 2021 and are up 18.5% year-over-year, down from 19.2%. 

Believe it or not, this is the first time we actually saw prices moderate on an annual basis in quite some time.  We are still seeing home prices rise, but just at a slightly slower pace. 

This is great news for homeowners, as their equity position has increased tremendously over the last 3+ years.

If I can be of help in strategizing on a purchase or refinance, don’t hesitate to reach out, as it would by my pleasure to do so!

Choosing The Right Mortgage Loan Originator

Whether a borrower is making a home purchase or refinancing their current mortgage, choosing the right mortgage loan originator is critical to their success.

The right lender is a crucial part of the purchase process…but how do you know if the loan originator is an expert and understands your needs and financial situation?

In this article, we’ll go over several ways to identify how borrowers can identify a great home financing partner.

Purchasing a home is one of the most important transactions of our lives, so we need someone who can not only find a low interest rate, but understands the borrower’s financial situation and long-term goals.  The terms of the mortgage are going to impact the borrower’s household finances for years to come, so it’s important to find the right fit!

The right loan originator will help determine the mortgage program and term, as well as walk the borrower through that lengthy process.  Lenders should have experience in the local market and the type of transaction (primary residence, 2nd home, or investment property), as well.

Understanding the Local Market

It’s important that a borrower’s originator has knowledge of the community.  They should be able to offer personalized expertise and information unique to the area buyers are considering.

The lender should also have a good report with the borrower’s real estate agent and other real estate professionals.  This will give the buyer access to a resourceful network of inspectors, contractors, financial professionals, in their area.

With record-low mortgage rates and the increased demand for living space, coupled with the entrance of a large group of first-time home buyers, our market is expected to be tight for the foreseeable future.

Utilizing a local loan officer to help you navigate the home market, one who is focused on helping you make the best decisions for your financial situation and long-term goals, is crucial.

Access to a Variety of Mortgage Programs

There are always a number of factors that impact loan qualification – such as self-employment, student loan debt, and credit score, just to name a few. 

There truly is no one-size-fits-all mortgage, and you buyers should consider working with a loan originator that has access to multiple loan programs.

With that in mind, it’s critical that borrowers work with a local loan officer with access to a multitude of home loan programs that fit’s their scenario.  There are many types of loans out there, and it’s the lender’s responsibility to recommend the right product for the borrower’s needs.

A Trustworthy Lender

The borrower’s relationship with their loan officer shouldn’t end at closing. A reputable lender should be concerned with your overall purchase experience and ask for your feedback after the transaction.

The borrower should continue to rely on their lender as a resource for advice and expertise for all of their future real estate needs.

One way for a borrower to find out about the lender’s reputation is to check online reviews.  Both positive and negative ones should be readily available with a simple online search.  Check out Zillow or Social Survey to find out more about your chosen lender!

Long Term Perspective

Ultimately, the right originator should be a strong advocate and listener who will act in the borrower’s best interest throughout the process.

The right lender should ask many questions, be cooperative and willing to listen, plus really know the borrower’s financial situation and goals. Their communication must be top notch.

Purchasing a home might seem like a one-time thing, but that’s not the reality of purchasing real estate.  The right loan originator will be a partner for the long-term and shouldn’t take a one-time transactional approach.  It’s wiser to find a home financing partner for a lifetime.

It would be my pleasure to help any borrower for the long term! Please do reach out to me for more information or to discuss how I might be able to help.

Now Is A Great Time To Refinance That Investment Property

Mortgage rates are at all-time lows.  Many homeowner’s are taking advantage and locking in for the long term.  But what about investors, are they doing the same?

Refinancing rental properties can unlock a good deal of wealth-building opportunities for investors, including the ability to lower interest rates and monthly payments, improve loan terms, and earn additional cash flow.

Interestingly, many investors have not taken advantage of today’s market.

For one reason or another, there are a number of investors that don’t even realize the opportunity that’s in front of them.

Should I Refinance My Rental Property?

In most cases, investors should consider a refinance to:

  • Lower the mortgage rate
  • Convert from an ARM to a fixed-rate
  • Turn a hard money loan into a conventional one
  • Pay off the loan more quickly
  • Upgrade a current investment property

Much has changed in a relatively short period of time regarding rates and valuations…and they are almost all in favor of the investor.

As mentioned earlier, interest rates are historically low…and they look a lot better than they did even this time last year, let alone a few years ago.

5.75% versus 4.5% example

If you purchased an investment property in October of last year, for example, many borrowers took on mortgages with an interest rate in the high 5% range.

Today, if that investor were to refinance their $250,000 loan from 5.75% to 4.5% for example, they would save nearly $200 per month.

There might be some discount points involved depending on the scenario, but they can be financed into the loan amount, so the only out-of-pocket cost would be that of an appraisal.

Assumptions: $250K loan, 70% loan-to-value and 760+ credit score

In Conclusion

When you own an investment property, the goal is to earn a solid rate of return…and refinancing that property can increase your short-term cash flow and help you build longer-term wealth.

Do reach out to me for more, as it would be my pleasure to help you look at different options and programs that might help you in today’s market.

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