Best Financing Options For You Long Beach Real Estate Purchase?
Financing a Long Beach home is a challenge for many people because of the changing rules in banking practices. There are many different loan programs available including a first time buyer programs that use a FHA (Federal Housing Association) Loan scenario with only 3% of the purchase price as a down payment.
One banking guideline that remains the same is, if you have a down payment of less than 20%, banks will require you to have private mortgage insurance (PMI) in addition to your home owner’s insurance. It is an insurance payable to the lender to offset losses in the case you, as the mortgagor, does not repay the loan. And, the lender is not able to recover it’s costs after foreclosure and the sale of the mortgaged property. Typical costs are about $55 to $70 per month.
How to Get Rid of PMI in the Future
Once your principal is reduced to 80% of the loan to value, the PMI is often no longer required. When that occurs, you may want to refinancing to remove it or ask the lender to remove it.
To be clear, suppose you purchased a home for $300,000 with 10% down and incurred PMI. Your loan is $270,000. If the home value stays the same or goes up and you pay your payments, at some point in the future, your equity which is the difference between what is worth and what you owe, will be 20% of the value.
When that occurs, you no longer need PMI. But to remove the PMI, most lenders require that you obtain and pay for an appraisal.
Do This Next…
Call a lender to discuss your financial situation so you will know how much you can afford and be able to make a wise purchase decision with a real estate professional (on The Red Wagon Team, of course –grin).
We have several loan professionals that we are able to refer to you for FREE that work at mortgage companies and banks that can assist you. Contact us by phone at 1-800-300-6126 or online at http://www.redwagonteam.com/contact.htm. For more information about home loans, consider our Mortgage Center for tips and strategies.