Your home is not just a structure with four walls and one roof. It instills a wide range of thoughts and emotions in the residents that cannot be found in rented homes. Furthermore, you have long term financial and safety benefits if you male a smart home investment. Let’s take a look at other advantages. Read more
Buying a home for the first time can be a challenging and frightening experience, considering all the potential mistakes that can happen, leading to property loss. That’s why it is essential to prepare as a first-time home buyer with the help of a financial counselor. Read more
Do you have a steady job and decided the time is right to buy? Check these tips before you venture out to your mortgage broker, and you’ll be ahead of the game! Read more
Buying a home involves various financial obligations, and you may have taken out a mortgage to help pay for your home. However, with fluctuating interest rates and an unstable financial outlook, you might be looking to adjust your current home mortgage with one that is more flexible to your requirements.
Refinance mortgage is an ideal option for many homeowners, whether they’re looking to free up some money or want to shift from an adjustable rate to a fixed rate. Here is what you should know about mortgage refinancing before you get started:
What is Mortgage Refinancing?
Mortgage refinancing is when you get a new home loan to replace the existing mortgage on your property. It may be due to various reasons, like you might be getting a lower interest rate than what you’re paying for your current mortgage, thereby saving money.
While mortgage refinancing can sound complicated, it is quite simple to get started if you’re working with a trustworthy home mortgage company.
When Should You Get One?
Several reasons may prompt you to get mortgage refinancing, and these include:
If you’re getting a lower interest rate on your new home mortgage
If you want to shift from a fixed-rate mortgage to an adjustable-rate mortgage, and vice versa
When you want to shorten the repayment period of your mortgage, or conversely, you are looking for a 30-year mortgage plan to replace your existing 15-year mortgage.
If you’re looking to consolidate your debt or have a sudden financial emergency
Depending on your current financial situation, refinancing may not be the best option for you. It can cost anywhere between 3% to 6% of your loan’s principal amount and has separate application fees.
How to Start
If you’re considering refinancing your home mortgage, you should have a clear reason for doing so. Whether it is to save money or extend your repayment period, you need to be clear. You will need to check your credit score and history to ensure that you can get good rates for your refinancing.
When you don’t have a good credit score but are refinancing to get lower interest rates, it might be worthwhile building your credit score for a few months first. You will also need to determine your existing home equity. When you have more equity on your home, the lender will determine your refinancing is less risky, which can make it more favorable for them.
Working With the Right Experts
Ensuring that you get the best refinancing plan for your home is essential, and you will need to look for a good and experienced mortgage refinancing business in South Florida. It’s best to discuss with your lender the possible options, so you can lock in your rate before it goes up.
Looking for Reliable Mortgage Refinancing? We Can Help
When you’re in South Florida looking for the best mortgage refinancing plan for your needs, Pacific Lending Group is here to help. Our business has maintained an A+ rating from the Better Business Bureau for years, which shows our commitment to our customers and our dedication to serving your needs. Refinancing doesn’t need to be a stressful experience, and we can simplify it for you with the help of our experts. Call us at (954) 227-4727 to schedule an appointment.
Private mortgage insurance (PMI) is a policy that protects the lender in the case of default by the borrower. The lender is assured of being compensated for their loss if you fail to make your monthly mortgage repayments. This is not a policy that protects you.
Why Do You Need PMI?
The role PMI plays in financing is simple: it ensures cash flow. The lender needs to know they will be paid back even if there are some extraordinary circumstances.
Any loan where the borrower has less than a 20% stake in the property must have PMI. If you put down 3.5%, you can obtain a 95% LTV mortgage without premiums, but as soon as that drops below 80%, you will need to get PMI for your security.
The benefits of having PMI are that it allows you to finance more than just 80% of the value of your home.
Remember, you do not need PMI if you pay 20%. The lender will give you a lower interest rate because they’re protected in case something happens.
How Does It Work?
When you receive your first billing statement, the lender will give you an annual percentage rate (APR) that includes PMI. Many people think this is their interest rate for the year; it’s not. It’s simply a way of allowing you to see how much PMI you will be paying each month.
Your mortgage lender will decide your true APY (annual percentage yield) and will depend on your credit score and down payment amount.
When Do You Need PMI?
For conventional loans, the lender must ensure that you have PMI once your LTV (loan to value) drops below 80%, but again, there are exceptions. If you opt for an FHA loan, which means you’re borrowing less than 95% of the home’s worth, then you may not need any premium payments at all.
If the borrower is on the hook for PMI, they’ll see how much of each payment goes to principal, interest, and PMI on each billing statement.
For example, if you made $1,000 in payments over one month, your lender would charge you $200 toward your principal, $300 toward interest, and $100 toward PMI. This gives you a clear understanding of where your money is going each month.
What Happens If You Do Not Have PMI?
If you are not paying for private mortgage insurance, then the riskiest part of the loan is what’s called “uninsurable.” Since the lender will assume no one could pay them back, they will charge you a higher interest rate.
Basically, by not paying for PMI, the lender makes the riskiest part of your loan uninsurable and charges you more than if you had insurance in place. You may then be asked to pay an extra month’s payment each year to compensate the lender for this risk.
Contact Pacific Lending Group for Any Mortgage Insurance-Related Advice
If you have any questions about private mortgage policy, please contact a representative from Pacific Lending Group. We will be glad to answer any of your mortgage questions and help you with your home purchase or refinancing needs. Call 954-227-4727