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Money and Your Finances Today

Building for Your Future Security

building financial securityBuilding financial security is a long term process. First, you set goals for savings and investments. Then you build the plan on what it will take to achieve those goals. Not only does it require consideration of saving a part of your income, but you must also consider your debt.

Your debt will reduce your ability to save, so you want to plan your debt, such as mortgages and car payments, in consideration of your savings goals.

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May 8, 2022
Mortgage Assumption Agreement
What is an assumption agreement
A Mortgage Loan Assumption Agreement is commonly used for allowing a third party to assume the obligations of a mortgage loan. The loan assumption agreement frees the original borrower from the note and mortgage.

The lender must approve any assumption agreement and will usually take steps to underwrite the assuming parties credit. More info...

May 2, 2022
Commercial Real Estate Loan Prepayment Penalties
Plan Your Borrowing to Avoid Prepayment Penalties
Investors are looking for the security of long-term fixed-rate commercial loans but are balking at the prepayment penalties that come with many commercial real estate loans. Understanding how commercial real estate loan prepayment penalties work can save you money if you plan accordingly.
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Apr 20, 2022
Bad Credit Loans
Get Yourself Out of Financial Trouble
When your income is drastically reduced the first place you look to save money is by not making loan payments. This can have a serious effect on your credit report which will in turn effect your ability to borrow money. If this has happened to you, there still may be ways to borrow money with a special bad credit loan. You can request up to $10,000 in one fast application. More info...

Mar 14, 2022
Learn the Mortgage Process as a First Time Homebuyer
How to Buy a House
VA Loans and FHA loans
These are both government loans but VA loans have different requirements such as being active in the military or a veteran of military service. Both loans carry additional fees but can be approved with a much smaller down payment.
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Mar 12, 2022
Build a Commercial Real Estate Empire:
How to Scale to New Heights With the Right Financing, Deals, and Strategies
More info...

Feb 15, 2022
How to Finance and Build Your New House
Residential Construction Loans
Choosing the right construction loan for building your new house is the most important part of the construction process. Note that a construction loan contains many variables that can cost you time and money or cause unwanted delays. Understand these variables before you go shopping for a loan. Lenders tilt the table in their favor so you want to find the table with the least tilt. More info...

Jun 12, 2021
Private Mortgage Insurance - When is it Needed
When You Can Cancel PMI


Private mortgage insurance (PMI) is required for loans of more than 80% LTV. The borrowers pays PMI as part of their mortgage payment.

Private mortgage insurance (PMI) provides coverage to the mortgage lender in the event of default. The private mortgage insurance premium is paid by the borrower.

Mortgage lenders generally require private mortgage insurance on all high loan-to-value ratio loans (typically, loans that exceed 80 percent of the property's value). When a lender has this type of coverage, a portion of the loan is guaranteed so that the lender carries no more risk on a high loan-to-value ratio loan than it does on a loan with a ratio of 80 percent or less.

Private mortgage insurance companies offer several programs for mortgage lenders, but the most popular plan reduces the lender's risk exposure to 75 percent of the property's value or loan principal. The higher your Loan to Value the higher the PMI insurance premium.

For each mortgage loan that is to be covered, the lender submits a packaged loan file with an application for mortgage loan insurance to the private mortgage insurance company. The loan file package includes the loan application, credit report, verifications of deposit and employment, and the appraisal report. The insurance company usually completes its processing quickly - often within 24 hours - and issues a commitment to insure. Typically, the mortgage insurance is added to the monthly payment for the mortgage. The cost of such insurance can be substantial and add over $100 per month to the mortgage payment.

However there are two recent major changes to PMI insurance that benefit the consumer. First, effective January 1, 2007, PMI insurance became deductible on income tax returns.

Homeowners Protection Act

Secondly, on July 29, 1998, The Homeowners Protection Act was passed which required automatic cancellation of private mortgage insurance by the lender when the loan to value ratio reaches 78%.

As another option, homeowners are now able to ask lenders to cancel PMI after their equity reaches 20 percent as long as they are current on their loan payments and their home has not depreciated below its purchase value. Lenders may require an appraisal for determining current value before agreeing to cancel the PMI. Lenders are also allowed to continue private mortgage insurance for a longer period of time for certain high-risk loans.

The legislation requires lenders to provide disclosures to borrowers about cancellation of private mortgage insurance. Lenders are required to give an initial disclosure to the borrower at the time of closing that indicates when private mortgage insurance could be canceled at the borrower's request and when it would be automatically canceled even if the borrower did not specifically request it.

Amortization Schedule

Lenders must also provide an amortization schedule at loan closing for all fixed rate mortgage loans covered by PMI insurance.

Additionally the legislation requires that an annual disclosure be given to the borrower that would explain the borrower's right to cancel private mortgage insurance. This disclosure could be included with other annual disclosures, such as the escrow account disclosure or the report of interest paid.

If the insurance were canceled (either at the borrower's request or when automatically terminated by the lender), the lender would send a notice to the borrower. The lender would arrange for a refund of a portion of the insurance premium, if appropriate.

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Jan 24, 2021
Personal Finance Summarized
A quick way to learn what you need
Managing your personal finances requires knowledge and devotion to executing sound financial habits. This Twitter source will help you do both fast and with your desired results. No matter what you do to earn money, it is critical to know how to manage that money. Personal financial stability is the key to living a satisfying life. More info...

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