Louisville Kentucky Mortgage Lender for FHA, VA, KHC, USDA and Rural Housing Kentucky Mortgages: Private Mortgage Insurance (PMI) Kentucky Mortgag...

Louisville Kentucky Mortgage Lender for FHA, VA, KHC, USDA and Rural Housing Kentucky Mortgages: Private Mortgage Insurance (PMI) Kentucky Mortgag...: 

Kentucky Mortgage and PMI Breaking down PMI PMI can be a nominal price to pay for being able to secure a home loan with today's mortgage...

Kentucky Mortgage and PMI Breaking down PMI

PMI can be a nominal price to pay for being able to secure a home loan with today's mortgage rates.
What is PMI?

For homeowners who put less than 20% down, Private Mortgage Insurance or PMI is an added insurance policy for homeowners that protects the lender if you are unable to pay your mortgage.

It is not the same thing as homeowner's insurance. It's a monthly fee, rolled into your mortgage payment, that’s required if you make a down payment less than 20%. While PMI is an initial added cost, it enables you to buy now and begin building equity versus waiting five to 10 years to build enough savings for a 20% down payment.

While the amount you pay for PMI can vary, you can expect to pay approximately between $30 and $70 per month for every $100,000 borrowed.


*Assuming an insurance rate of 0.51%; this cost can be cancelled from your payment once you reach 20% equity in your home for conventional loans, but not FHA loans

**Does not include property tax and homeowner’s insurance payments

PMI isn't forever

Once you've built equity of 20% in your home, you can cancel your PMI and remove that expense from your monthly payment. If you're current on your mortgage payments, PMI will automatically terminate on the date when your principal balance is scheduled to reach 78% of the original appraised value of your home. If you choose to use PMI, be sure to talk with your lender about these specific details of your policy.

Talk with your lender about what down payment makes the most sense for your financial situation. Remember, you have options!

Kentucky FHA Annual MIP and VA Funding Fee Reduction - Update!

 

HUD and VA have both announced reductions to the costs associated with their loans in Kentucky for FHA and VA loans and lower mortgage insurance premiums.       Kentucky FHA Annual Mortgage Insurance Premium   HUD announced in Mortgagee Letter 2023-05 a .30% reduction to the annual (paid monthly) MIP rates as well as an increase to the base loan amount threshold for the lower MIP rates.  With this threshold increase, loan amounts greater than $625,500 but less than or equal to $726,200 can see up to .55% reduction in annual (paid monthly) MIP.   All loans in process and new applications will be able to use the lower rates, however, we are currently working on updating our system to accommodate and will advise as soon as that has been completed. This change helps to increase FHA products affordability and allows FHA product to be more competitive.   Please note, there is no change to the upfront Mortgage Insurance Premium (UFMIP), this change only impacts annual (paid monthly) MIP.  See below for a grid of the new rates versus the old rates. New Annual (Paid Monthly) MIP Rates: Loan Terms > 15 Years Base Loan Amount ≤ 95% LTV > 95% LTV <=$726,200 .50% .55% >$726,200 .70% .75% Loan Terms ≤ 15 Years Base Loan Amount ≤ 78% LTV >78% and ≤ 90% LTV > 90% LTV <=$726,200 .15% .15% .40% >$726,200 .15% .40% .65%            Prior Annual (Paid Monthly) MIP Rates:  Loan Terms > 15 Years Base Loan Amount ≤ 95% LTV > 95% LTV <=$625,500 .80% .85% >$625,500 1.00% 1.05% Loan Terms ≤ 15 Years Base Loan Amount ≤ 78% LTV >78% and ≤ 90% LTV > 90% LTV <=$625,500 .45% .45% .70% >$625,500 .45% .70% .95%           Kentucky VA Funding Fee   PRMG is pleased advise and align with the recent announcement by VA in Circular 26-23-06 for a reduction to VA funding fee rates for loans closed on or after April 7, 2023.   See below for a grid of the new funding fee versus the old funding fee. Funding Fee for loans closed on or after 04/07/23: Loan Purpose Down Payment % for 1st Time Use % for Subsequent Use Purchase 0 – 4.99% 2.15% 3.30% Purchase 5 – 9.99% 1.50% 1.50% Purchase 10% or More 1.25% 1.25% Refinance (Cash Out) N/A 2.15% 3.30%  Funding Fee for loans closed prior to 04/07/23: Loan Purpose Down Payment % for 1st Time Use % for Subsequent Use Purchase 0 – 4.99% 2.30% 3.60% Purchase 5 – 9.99% 1.65% 1.65% Purchase 10% or More 1.40% 1.40% Refinance ​​​(Cash Out) N/A 2.30% 3.60%   HUD announced in Mortgagee Letter 2023-05 a .30% reduction to the annual (paid monthly) MIP rates as well as an increase to the base loan amount threshold for the lower MIP rates.  With this threshold increase, loan amounts greater than $625,500 but less than or equal to $726,200 can see up to .55% reduction in annual (paid monthly) MIP.   All loans in process and new applications will be able to use the lower rates, however, we are currently working on updating our system to accommodate and will advise as soon as that has been completed. This change helps to increase FHA products affordability and allows FHA product to be more competitive.   Please note, there is no change to the upfront Mortgage Insurance Premium (UFMIP), this change only impacts annual (paid monthly) MIP.  See below for a grid of the new rates versus the old rates. New Annual (Paid Monthly) MIP Rates: Loan Terms > 15 Years Base Loan Amount ≤ 95% LTV > 95% LTV <=$726,200 .50% .55% >$726,200 .70% .75% Loan Terms ≤ 15 Years Base Loan Amount ≤ 78% LTV >78% and ≤ 90% LTV > 90% LTV <=$726,200 .15% .15% .40% >$726,200 .15% .40% .65%            Prior Annual (Paid Monthly) MIP Rates:  Loan Terms > 15 Years Base Loan Amount ≤ 95% LTV > 95% LTV <=$625,500 .80% .85% >$625,500 1.00% 1.05% Loan Terms ≤ 15 Years Base Loan Amount ≤ 78% LTV >78% and ≤ 90% LTV > 90% LTV <=$625,500 .45% .45% .70% >$625,500 .45% .70% .95%           Kentucky VA Funding Fee   VA in Circular 26-23-06 for a reduction to VA funding fee rates for loans closed on or after April 7, 2023.   See below for a grid of the new funding fee versus the old funding fee. Funding Fee for loans closed on or after 04/07/23: Loan Purpose Down Payment % for 1st Time Use % for Subsequent Use Purchase 0 – 4.99% 2.15% 3.30% Purchase 5 – 9.99% 1.50% 1.50% Purchase 10% or More 1.25% 1.25% Refinance (Cash Out) N/A 2.15% 3.30%  Funding Fee for loans closed prior to 04/07/23: Loan Purpose Down Payment % for 1st Time Use % for Subsequent Use Purchase 0 – 4.99% 2.30% 3.60% Purchase 5 – 9.99% 1.65% 1.65% Purchase 10% or More 1.40% 1.40% Refinance ​​​(Cash Out) N/A 2.30% 3.60%