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October 2014     






Private Mortgage Insurance

Private Mortgage Insurance (PMI) is a financial instrument that can be used by potential homebuyers to get into a home that they, otherwise, would not be able to afford. Basically, PMI acts as a safety net for lenders who want to process a loan for a borrower who does not have the 20 percent down payment that is usually required to qualify for a mortgage. This insurance is typically used by first time home buyers and can get a qualified borrower into a home with as little as 3-5 percent down.

In order to understand the details of Private Mortgage Insurance it is important to understand the motivation of lenders. Lenders are in business to make money and borrowers who have a down payment of less that 20 percent are most likely to default. If a lender approves too many loans to unqualified borrowers they open themselves up to risk if those loans begin to default.

Normally the lender that you are dealing with will provide you with information on a PMI policy and will secure it for you. The initial cost of the PMI can either be added to your closing costs or tacked onto your monthly mortgage payments. This mortgage insurance can range in price from ˝ to 1 percent of the loan amount each year. Borrowers will need to continue to make mortgage insurance payments until they have reached the 20 percent equity threshold.

The Homeowners Protection Act passed in 1998 contains a number of provisions to protect the interests of PMI borrowers. The main provision of the act calls for the automatic termination of the policy when the borrower reaches 22 percent equity in their home (based on the original property value). There are also provisions that require the lender to provide the borrower with information on termination and cancellation of the policy.

If you would like more information on a Private Mortgage Insurance policy and how it can help you get into your dream house today let me know and I can recommend a qualified lender.


Packing Preparation

When you find that home of your dreams you are invariably going to need to go through the moving process. In order to ensure that this process is as stress free as possible I have included some tips that will help you prepare and pack so that all your prized possessions make the move intact.

  • Keep boxes to 50 lbs or less. Put heavy items in small boxes and light items in big boxes.
  • Pack non-breakables tightly in smaller boxes, so they're not too heavy.
  • Buy clean newsprint to wrap items, and bubble wrap for padding.
  • Pack breakables loosely in plastic storage bins with lots of bubble wrap.
  • Rent furniture pads.
  • Mark your boxes by room, so you know exactly where everything goes. Color coding or using a number system works great.
  • Write "FRAGILE" on all boxes with breakables and stack these boxes on top.
Tip Bottom
 
Your money

Home Repairs you Cannot Afford to Ignore:

Home repairs are an issue that many of us tend to dodge. We understand the necessity of the repairs; however when it comes down to it many of us do not have the time or money to fix everything. The following list of minor home repairs could end up costing you big money if you continue to procrastinate.

  • Rodent incursions - Rats, mice and other vermin love to chew through insulation and wiring and are suspects in many house fires.
  • Soaring fuel bills - This is more than a pocketbook issue, since poorly functioning systems can cause deadly carbon monoxide buildup in your home.
  • Peeling paint - Paint is like a home's skin. It's the first line of defense against incursions by water and pests. Water that seeps into wood can lead to rot.
  • Flickering lights - It might be that the wiring in your house is dysfunctional or you have too many appliances hooked up to a single circuit. Either one can cause a fire.
  • A water leak - Left unchecked, leaks can lead to rot, dry rot, mold and termite infestations. Water can cause roofs to collapse, foundations to buckle and all manner of expensive repairs. Water-related problems can also get your home blackballed by insurance companies worried about mold-related claims.

Market

Existing-Home Sales Slightly Lose Momentum in August as Investor Activity Declines

After four consecutive months of gains, existing-home sales slipped in August as investors paying in cash retreated from the market, according to the National Association of Realtors®. Sales increases in the Northeast and Midwest were outweighed by declines in the South and West.

Total existing-home sales, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, decreased 1.8 percent to a seasonally adjusted annual rate of 5.05 million in August from a slight downwardly-revised 5.14 million in July. Sales are at the second-highest pace of 2014, but remain 5.3 percent below the 5.33 million-unit level from last August, which was also the second-highest sales level of 2013.

Lawrence Yun, NAR chief economist, says sales activity remains stronger than earlier in the year, but fell last month as investors stepped away. "There was a marked decline in all-cash sales from investors," he said. "On the positive side, first-time buyers have a better chance of purchasing a home now that bidding wars are receding and supply constraints have significantly eased in many parts of the country."

Yun adds, "As long as solid job growth continues, wages should eventually pick up to steadily improve purchasing power and help fully release the pent-up demand for buying."

Total housing inventory at the end of August declined 1.7 percent to 2.31 million existing homes available for sale, which represents a 5.5-month supply at the current sales pace. However, unsold inventory is 4.5 percent higher than a year ago, when there were 2.21 million existing homes available for sale.

According to Freddie Mac, the average commitment rate for a 30-year, conventional, fixed-rate mortgage fell for the fourth consecutive month to 4.12 percent in August from 4.13 percent in July, and remains at the lowest rate since June 2013 (4.07 percent).

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