Sunday morning talking points

Sunday morning… Good day for touring clients around available properties. I’m actually waiting for an appointment and while enjoying my coffee and funny papers, I had a few thoughts I’d like to share.

First on my list of talking points is, all this chatter about real estate bubbles and declining markets. Well, most of you know my views on these sour matters but I noticed a piece in the paper about PMI and thought it was good information to share.

If you have PMI (private mortgage insurance) you can save yourself some money on your monthly payment if you have paid down your loan to at least 80 percent of its value. PMI can add $100 or more to your monthly payment, and, it seems a waste if you don’t need it.

PMI is an insurance policy that you pay for that the lender will use in lieu of a full 20% down payment on a home purchase. This policy covers your lender in the event that you default on the loan.

Most people who are paying for PMI don’t realize that they can terminate the policy under the Homeowner Protection Act of 1998. Basically, this law empowers homeowners with PMI to cancel their coverage if their loan has been paid down to 80% or more of the ORIGINAL VALUE. Also under the law, even if a person forgets to ask for cancellation, the policy must automatically cease after the loan has been paid down to 78% of value. Most of these are requirements of FHA loans but also apply to other loans varying requirements. You’ll want to check with your lender or real estate professional about the requirements for canceling PMI on your mortgage.

Note:

• You must be current with your payments &


• There may not be any other loans on the property

If there is a decline in the value of your home, it will be harder to cancel your PMI because the loan to value ratio will be higher, so, if you can – cancel it now. The money you save could be invested elsewhere.

Second. Since were on the topic of insurance… Renters! According to a poll, 70% of renters don’t have Renter’s Insurance. Their reason? They assume their landlord’s policy will cover their losses in a disaster, fire, flood, earthquake, etc…

Their assumption is faulty. As a landlord, any policy I have on a property covers me, not you (my tenant). It is the renter’s legal responsibility to insure his or her personal property against loss. Coverage is very much like a homeowner’s policy and usually much less expensive. So, if you rent, call your insurance agent and ask about Renter’s Insurance.