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Mortgage Insurance – What is it and When is it Required

Mortgage Insurance insures the lender from loss, if the borrower is unable to pay back their mortgage. It is required on loans that are more than 80% of the property’s purchase price and vary significantly between conventional loans and government insured loans. Buyers obtaining conventional loans with less than 20% down will be required to obtain a Private Mortgage Insurance (PMI). PMI is added to the monthly payment. The annual cost can range from .3% to 1.20% of the loan amount depending upon the amount of down payment.

Federal Housing and Urban Development (HUD) insures Federal Housing Association (FHA) loans through a required upfront mortgage insurance premium (UFMIP) and a monthly mortgage insurance premium (MIP). The UFMIP is normally financed into the loan and equal to 1.75% of the loan amount. MIP varies depending upon the amount of down payment and ranges from .45% annually on the 90% 15 year term mortgage to 1.35% annually on a 95% 30 year term loan.

You may wonder why someone would obtain an FHA insured loan versus a conventional loan since the cost on government insured loans is more expensive. The answer is FHA loan qualification ratios are more lenient allowing a buyer to qualify for a loan that they would not otherwise qualify. See our post on Determining Your Maximum Purchasing Power which discusses the different ratios used in conventional and FHA insured loans.

Home Inspections

Home inspections are part of real estate transactions almost always these days. To help understand the home inspection process better I asked Lance Marquardt with Pillar to Post Home Inspections some basic home inspection questions. Here are the questions I asked and his response to them: What kind of things do you see most often…Continue Reading

ArtFest 2016

ArtFest Benefits the Northwest Museum of Arts & Culture (MAC) ArtFest 2016 will have approximately 30,000 people attend the event. The event takes place at Coeur d’Alene Park, Brownes Additions, Spokane WA where there will be hundreds of booths selling original art to craft items to support the MAC. In addition there will be music,…Continue Reading

What Buyers Want

Most homebuyers prefer newer homes with extra space, according to the NATIONAL ASSOCIATION OF REALTORS’® (NAR) 2013 Profile of Buyers’ Home Feature Preferences. The survey, which examined buyers who purchased a home between 2010 and 2012, finds that the typical recently-purchased home was built in 1996 and had 1,860 square feet. The typical buyer purchased…Continue Reading