Last week we discovered some of the hold ups and glitches that keep a property from closing on time. We are going to continue on in that vein since the causes are many and being educated seems to keep the frustration level to a bare minimum.

I know everyone has heard that appraisals, or the lack thereof, have been a bone of contention for many a Real Estate transaction. Customers are sometimes shocked to find that the property is not appraising for what they thought and many times there are simply no available current comps to go by. The new Home Valuation Code of Conduct, or HVCC has further added to the delay, making it very difficult to do a quick close. These federal regulations that were meant to ensure the integrity of the appraisal process require that appraisers be assigned by a third party, such as an appraisal management company.

These appraisers are chosen from a list and are on a rotating basis. The problem arises when the appraiser is not even from the area and is not familiar with the area or the property type. The result is many times an appraisal that is way off base. I actually had this happen to me just this last year and the result was the closing fell apart and both sides of the deal. The appraisal was not a good one and the comps used were not very legitimate. The story ended on a happy note as we were able to renegotiate at a different price and move to close although the seller did not receive what he felt was a fair deal.

Another hurdle is the continued scrutiny of lenders doing securitized loans. There have been cases where the secondary market underwriter questioned the appraisal because it did not match up with the value on Zillow. I have had several customers that have called me wanting to know why my value of their property does not match up to sites such as Zillow. Many of these on line appraisal sites are not in keeping with our current market and should not be relied on as factual.

Another snag for closings is in the area of inspections. VA and FHA properties are especially troublesome in that some of the guidelines require that the seller do the repairs. Repairs required by VA appraisers can delay a closing because the work must be completed before the property can change hands. Another factor in a VA close is that the buyer can not agree to pay for the repair, which can be a snag if the seller can not or will not pay. In many cases, short sale or foreclosured properties must be purchased as an AS IS contract.

Whew! Are we closed yet? So as you can see getting the contract is just beginning of the race to close which can be sometimes feel more like an obstacle course. It seems that no matter how much you plan ahead it seems that closings are just taking longer than usual. The “new normal” seems to be 45 to 60 days from the date of contract.

Once again it has been great visiting with you and sharing information about this profession that I am passionate about. Please be sweet and patient with your Realtor and take a deep breath and jump smoothly over all the closing hurdles. Until next week make sure that you remember my get even philosophy; “The only people we have to get even with are those that have helped us.”

Karen K. Smith
Beachy Beach
Real Estate
karen@karensbeach.com
www.karensbeach.com
thebeachshow.com
850-527-5651
“The only people we have to get even with are those that have helped us”

As usual I try to concentrate on what is going on in our Real Real Estate world and there have been plenty of challenges to think and write about. I have found however if you are proactive it may lessen the sting for you and your customers. A new trend or new challenge for all of us has been the dreaded closing delay. Delays have become the norm rather than the exception so I thought it would be good to go over some of the causes so our customers can be forewarned and be ready.

Having a contract is a GREAT thing for all of us but as the old song says,”We have only just begun…”
According to the National Association of Realtors between 10 and 14 percent of pending transactions don’t close. Another 20 percent are delayed and that statistic is rising!!!!

One of our biggest defenses is letting our customers know up front that there may be delays and to be prepared for them so they are not taken aback at the last hour!!! The area of loan approval and qualifications is a big area that has been causing the delay of close.

Buyers need to be aware that qualifications are tricky these days and even getting a pre-qualification letter does not mean the buyer will be approved for the loan. Many banks are no longer issueing pre-approval letters. Verifying income and assets up front is vital in knowing the financial health of the buyer. New requirements under the Real Estate Settlement and Procedures Act have brought changes to the way banks are able to qualify buyers.

Talking face to face to a lender is much preferable than relying on an on- line approval. Tighter lending standards and concern about mortgage fraud has created more mortgage work and underwriting guidelines that further delay the closing process. A good example are the changes in gift letter documentation. FHA buyers who receive funds from a family member have to disclose the gift and its source, furthermore the giver has to disclose its source as well. Lenders say it is easy to overlook this later requirement and you CAN NOT get the loan without it.

New condominiums pose challenges as well because the FHA requires that 50% of the developments units must be under contract before the agency will approve financing for individual condos. Lenders are also asking to see statements of homeowners association reserves before approving a loan, which can create difficulty at the last minute if the HOA is not cooperative. This has been a special dihlema in foreclosures as many times the bank has cleared the issue only to have miss communication and question of title that has to go through many channels to be cleared. This is one of the reasons that Foreclosure closings are taking an average of 45 days or more rather than the quick close they used to be.

Business is good and buyers are still excited as ever about the great deals to be had, but knowing there may be a few hurdles to jump in advance may help complete the deal. Next week we will address some other issues but wanted to get you started with some good information. As usual, it is my great joy to communicate and share about this industry that I love so much. Until next time please remember; “The only people we need to get even with are those that have helped us” and my list is long!!!!

Karen Smith
grateful Realtor of Beachy Beach

–
Karen K. Smith
Beachy Beach
Real Estate
karen@karensbeach.com
www.karensbeach.com
thebeachshow.com
850-527-5651
“The only people we have to get even with are those that have helped us”

I have always loved the quote, “The more you CELEBRATE the more you have to CELEBRATE”  As I was taking my early Sunday gratitude walk on our beautiful white sand beaches with waves lapping at my ankles  I was celebrating every step.  Now is a great time to think GRATITUDE for  all that we have in Panama City beach and all the good in our lives that we can turn around and share with others.  I am sure that many of you know people that make complaining an art form and can go from distress to disaster in a matter of moments but it is my hope that is not our life plan.

As a Realtor you can imagine that we have been bombarded by questions of what the impact has been due to the Oil spill and again I DO NOT want to minimize those that have been truly impacted and they deserve help.  There are however many of us that have been fortunate to continue doing business and that is true in the area of Real Estate.  The media would have you believe that it is just AWFUL And I guess it could be if we all focused on the awful and stayed there but that does not have to be the case.  WE too have been impacted somewhat but I do know that the solution is NOT In focusing on the problem but focusing on what is going right. Thankfully people still know that buying in Panama City while the market is down is  a great investment for their future.

I am going to wax personal here today for just a bit and share a big SECRET with you about why I do not jump on the worry train when life turns up challenges.  When I was a child I grew up in a situation where I could have gone towards the negative and chosen a life path that was destructive and self abusive but for whatever reason I started reading positive books about people of greatness.  Many of my family members went a different direction. My mentors and role models  were people that others accused of being unrealistic but I discovered that  these so called unrealistic people  were  successful, peaceful and going places and best yet…. taking others up the hill with them!!!!  At age 10 I decided that I would not give in to the negative and the worry and do all that I could to “Accentuate the Positive”.   I agreed with Henry Ford when he said, If you think  you can or you think you can’t you are right!!!!

It is my hope that any of you that are worried and fretting over the uncertainty of our future that you will reach for some great books with empowering  ideas to lift you up so you in turn can lift up others.  I will give you a short list of my books at the end of this article.

The thing that I have noticed about hardship is that there will ALWAYS be people who find opportunity in every obstacle.  I am not sure why some people find them while others push them away.  I think the reality is that the quest before us will be as hard as we make it. When we all let go of the fear then we can allow creative solutions to come to mind.  Great men and woman have always done that.  These people have great energy, gifts and vision for what can be.  The challenge and adversity just propels them to greatness and I suspect it can for you too.

Please go take a walk on our sweet beach that we love so much and better yet grab someone to go with you so you can share in it.  I am so thankful for all the people that have continued to bless our business and our life and you know the drill……. Until we meet again be sure to remember, “The only people we have to get even with are those that have helped us”  So many of you are on my list!!!!!

–
Karen K. Smith
Beachy Beach
Real Estate
karen@karensbeach.com
www.karensbeach.com
850-527-5651
“The only people we have to get even with are those that have helped us”

I know you thought that I was finished talking about short sales but here we go again. There has been a trend in short sale pricing that has been a bone of contention and a sore spot for Realtors and would be home buyers. Let me set the stage…. gorgeous home in a fabulous neighborhood should be about 400,000 even in today’s market and this price is a tantalizing teasing price of $199,000 and the lines begin to form and the phones are ringing off the hook. The trend of pricing a short sale too low is not only misleading at best but can cause all other manner of dominoes to fall. Another issue is the offering too low a price for the foreclosure when market value shows the price is way below market.

When someone calls me about a short sale price I always inform them that we will decide on the price to offer after we do a CMA but most importantly after we talk to the listing Realtor. The Listing Realtor can be you best ally in getting your price right for an accepted short sale offer. If the price is too low and not in keeping with market pricing then everyone is more than likely wasting valuable time. I found a great article in Florida Realtor magazine about the consequences of being too low for a short sale listing and delighted to share the insights with you sweet people.

REASONS BEING TOO SHORT MAY NOT BE A GREAT IDEA:

1. The bank turns the short sale offer down.

If a house is truly worth120,000 and the BPO (Broker Price Opinion) backs that price up then the bank will stay close to that number. So to list the home for around 80,000 would more than likely never cinch the deal. Not only could it be a waste of your time and the sellers time it could cost them their home. The clock is ticking and the home is heading to foreclosure without an acceptable short sale price BASED ON MARKET VALUE. It also tends to get the hopes up of a would be buyer with a fantasy price.

When the short sale is being decided upon the negotiator normally ask questions such as:
How long has it been on the market?
How many offers have you gotten? and what price has it been and for how long?

If the same property was listed for 150,000 and all attempts to sell have been futile then a gradual drop in price is acceptable. If you land around 104,000 then the bank may be more inclined to take less money. If you can reasonably show the lender the reason for the drop in price and the extenuating circumstances then you may very well get a lower price if the pricing was correct to begin with.

2. It lowers pricing in the neighborhood.

So the bank accepts a ridiculous low ball offer that is way out of line then you have effectively lowered the price of the entire neighborhood. If the property closes for $75,000, a new market value has been set. Typically Short sales close for fairly close to market value, so if you do get one through, the market will notice. When the property is listed at $80,000 the other sellers in the neighborhood feel pressure to lower their prices too. This further results in a decline in market values for the subject neighborhood.

Short sales are going to be with us for a little while longer and it seems we keep coming up with more questions than answers. Because of the ambiguity of short sales it is vital that you have a Realtor that is well versed in short sales and your local market. Trust his or her advice and know that they have not only your best interest but the health of the market as well. These are challenging times but the more properties that we take out of the inventory the closer we get to real recovery.

I will end as I always do by reminding you my motto that I run my life and business by, “The only people we have to get even with are those that have helped us” Fortunately my list is long.

Let me start by saying that although there are challenges in our great state of Florida right now, we also have some things to celebrate for home buyers, especially those people who thought home ownership was out of the question for them. Many years ago when I bought my first home and you heard about Rural Development loans you thought about going to the back 40 or beyond to be able to afford a home that qualified for this program. Today things have really turned in our favor especially in Panama City Beach where much of the beach falls into that zone so to help you find your way I am going to share a little great news for would be home buyers.

Rural Development financing is most likely the fastest financing program in the US at this time. Although it has been around for years, we did not see much of it being used in the boom time. At this time conventional and other alternative programs increased their financing allowances to 100% and more, most people chose those other programs over the USDA guaranteed financing. This choice was mostly due to Rural Development income limits.

So the tide shifts…..A few years back conventional guidelines tightened and other more aggressive alternative programs disappeared. Rural Development increased their income limits which combined with greatly decreased home prices making RD financing a great alternative to home buyers who were unable to put much money down.

The great news is that RD allows for 100% financing, and requires NO monthly mortgage insurance. There is however an upfront funding fee which recently increased from 2.04% to 3.626925. This funding fee can also be financed into the loan, resulting in a loan to value of 103.62%.

And if that was not enough GREAT NEWS, unlike other conventional programs as well as conventional guidelines, this program bases value on the higher of the contract price or appraised value, and still allows cl0sing costs and prepaids to be financed in as long as there is available equity and if borrower still qualifies at the higher loan amount.

Underwriting guidelines are typically the same as other government loans (FHA & VA) but with two additional stipulations:

- Maximum annual income must fall within their income requirement
Income is based on family size

- Property must be in a Rural Development Eligible Zone.
SURPRISINGLY much of Bay County falls in the Rural development area INCLUDING much of our beaches!!!

As with FHA and VA, the property must be the borrowers primary residence and with RD, there must be extenuating circumstances to qualify if the borrower already owns a residential property.

Now for me that sounds like something to celebrate for many potential buyers. As I have stated before I am not a loan officer nor do I play one on TV so please for the real low down call your favorite banker. They can walk you through the process and you may just find that home ownership is right around the corner for you. It is always the best idea to be pre-qualified before you even start your home buying adventure.

This week more than ever lets stick to my life philosophy and reach out a helping hand to all of your fellow beach lovers and do what you can to be a part of the solution. If you look there are many reasons to be joyful no matter the circumstances and make the best of what you have, where you are. Remember, “The only people we have to get even with are those that have helped us.” My list is growing longer each week and so many of you are on it and I am so beyond grateful. Until next week… be sweet!!!!!

–
Karen K. Smith
Beachy Beach
Real Estate
karen@karensbeach.com
www.karensbeach.com
850-527-5651

I guess it goes without saying that we continue to be in a  buyers market and selling your home seems like an Olympic event at times.  Each week I am bombarded by questions about how to make your home stand out from the rest when selling.  I will not hammer my number one point which is price because I have beaten that horse and I think everyone gets it by now.  So beyond price what can you do as a seller? I want to share the Top 4 tips for making your home an inviting and welcoming place.

1.  Welcoming atmosphere

Buying a home is not just about the physical, it is a deeply emotional decision.  The buyer needs to imagine themselves living and growing in your home. It needs to make them feel good.  I can not tell you how many times a customers turns to me and says, “This just feels right or this feels like home”  I smile because I get it!!!

• Leave your house when showing so that the potential buyer feels comfortable talking about the home to their co-buyer and Realtor. They do not feel comfortable getting excited in front of you.
• It is best NOT to ask people to remove their shoes if not completely necessary. This of course is not the case if it is for religious or customary reasons.  Asking people to remove their shoes is sometimes insulting and does not give the buyer a welcome feeling.
• I love this one…. You may want to leave a small welcome note at the front door thanking them for coming and viewing your home.  At the very least you may brighten their day.  I always leave a happy note or quote on all my letters I send out so that whoever reads may be uplifted and it is always welcome.

2.  TEMPERATURE!!!!!

This is a really big one and a discussion that I have with so many of my sellers.  I do not always win this battle and am still trying to convince some.

• PLEASE keep the temperature comfortable.  This is NOT the time to conserve and save a dime!!!!  It is very important that the customer feel comfortable in your home and stay long enough to study their potential purchase.  People will NOT linger in a home that is too hot or too cold.
• It may even be a good idea to have the thermostat set a couple of degrees up or down depending on the season. This will prevent the AC from kicking on while the customer is there. Some systems tend to be noisy and that may not make a good first impression.
• There are other reasons for keeping temperature constant that could save you money down the road such as buckling of wood floors and mildew setting in.

3.  Create an a aesthetically pleasing atmosphere

• Set the table
• Have EVERY LIGHT  in the house on (including closets and utility lights) Light creates a happy mood and many times poor lighting is a deal breaker and sets the tone right away.
• Turn off the TV
• Have soft music playing but not the kind you would hear on the elevator or a funeral parlor
• Keep room doors slightly ajar and not closed off creating a more inviting open atmosphere
• Another thoughtful touch is little note cards explaining areas of interest. For example if you home is being sold furnished you may point out a special piece of furniture or a special light that may have extra value or a little flair.  That also says that you have taken care and have pride in your home.  I have seen this done in some homes I have shown and it has always gotten a positive response.

4.  SMELLS are so important!!!!

This is especially true for pet owners and smokers.  If someone walks in your home and they KNOW without seeing that you have a pet then we have a problem.  Many times I have customers who will walk in and turn right back around if the smells are offensive. This is also true about being overly aggressive in using sprays and deodorizers.

• Baking cookies in the oven and placing them for your guests is a double whammy…. it smells like home and nothing is more inviting that offering people a treat.
• If your home smells like cigarette smoke whether current or lingering that could cost you money even if your home does sell. It is important to take whatever steps are necessary to remove the odor which is easier said than done.  That will be a topic for another time.

There are so many wonderful deals in the market right now and you want your home to stand out!!!  Sometimes it is the little things that make people remember your home and want to come for that second viewing and maybe even bring you a contract!!!  Making the best of your home and highlighting its brighter points may put you on the top of someones list.  Please talk to your Realtor and ask her opinion about what can be done to make your home more inviting and welcoming.

I hope that you have been blessed to enjoy our beautiful beaches this week!!! It has been glorious and we love celebrating our home with you.  In the meantime I will end as I always do by saying, “The only people we have to get even with are those that have helped us” My list is overflowing.

–
Karen K. Smith
Beachy Beach
Real Estate
karen@karensbeach.com
www.karensbeach.com
850-527-5651
“The only people we have to get even with are those that have helped us”

The National Association of Homebuilders reported this week that their “Housing Market Index”, a survey among its members to quantify builder sentiment about the housing market, rose three points in May to 22. While this is still well below the 50 mark which indicates builders feel optimistic about the housing market, it is the highest reading since August of 2007. It has not been above 50 since April of 2006. Meanwhile, the Commerce Department reported that new home construction soared in April – up nearly 41% from the same moth last year. The number of starts in April was also 5.8% higher than the previous month. The number of applications for new building permits actually fell for the month – down 11.5% from March. April 2010 applications were, however, still nearly 16% higher than the same month in 2009.

Now for the latest in the soap opera that has become Rural Development. After warning for weeks that the program would be out of funds sometime in May, we were all relieved last week when USDA issued a memo saying the program had been saved and that a new 3.5% Guarantee Fee would insure the solvency of the program and that loans in the pipeline could close as scheduled. Well, the emotional roller coaster continues as late last week USDA rescinded their earlier memo saying that funds were depleted and no new commitments, even conditional commitments, could be issued at this time. This means I have four files gathering dust in Marianna and four customers unsure as when they will be able to close. I will be sure and provide an update as this drama continues to unfold.

Mortgage rates remain very attractive with the benchmark thirty-year, fixed-rate at 4.875% with no points. As I said last week, continued uncertainty surrounding the European debt situation and the slide in the value of the Euro has kept investors rattled and rates have thus improved even further. Gold prices are setting records and bond prices continue to climb and this, combined with returned volatility in the stock market, should keep up the downward pressure on rates in the short-run.

Best Regards,

J. Hunter Palmer

Mortgage Banker
Vision Bank – Edgewater Branch
559 Richard C. Jackson Blvd.
Panama City Beach, FL  32407

As a flood of first-time homebuyers rushed to take advantage of the $8,000 tax credit the Rural Development program has been strained to the limit with a year’s allocation of funds expected to be depleted sometime tomorrow. There has been little interest in Congress to extend funding and it now appears that without a last minute vote to re-fund the program, Rural Development will be out of funds on Wednesday. This will leave lenders with only the ability to secure “conditional commitments” from Rural Development. The good news is there are still a few investors out there that will purchase loans with only a conditional commitment from RD. This means that loans currently in process that missed the Wednesday deadline to secure funds will still be able to close – a relief for both lenders and the thousands of RD first-time buyers who were under contract prior to April 30th but not yet closed. Now for the bad news. Any loan that misses the deadline and is forced in a conditional commitment will see their up-front Rural Development Guarantee Fee jump from 2.041% to 3.5%. This is because legislation in the House of Representatives is calling for the RD program to be budget neutral and the higher up-front fee will ensure RD is self-sufficient.

Mortgage Rates continue to benefit from the increased volatility in the stock market as well as lingering concerns over European debt and the effects it could have on the US and global economies. The benchmark thirty-year, fixed-rate stands at 5.00% even and only a .25% point will by you down to 4.875%.  The fifteen-year fixed-rate stands at 4.375%. Jumbo rates are also beginning to feel the love as the once frozen secondary market for non-conforming loans is slowly beginning to thaw. The thirty-year Jumbo rate stands at 5.875%. So while some were pointing to a spike in interest rates in the second quarter of this year, it has, thus far, failed to materialize. Despite the $1 trillion bailout for Greece and the Euro, fears remain that the underlying global debt problem could domino into a financial calamity similar to the sub-prime mortgage crisis of 2008. Until those fears are quelled, the demand for bonds should keep yields and mortgage rates low in the short-run.

Best Regards,

J. Hunter Palmer

There is so much to be excited about and write about his week, I have had a hard time making a decision. But as usual I focus on what is actually happening in my little Real Estate world. The market is still very much a buyers market so the push is on for our sellers to put their best foot forward so I thought we would concentrate on a few things that a seller can do to help their Realtor sell their home. I will only briefly remind you that price is imperative from the very beginning… not after it has been on the market for two months but from day one!!!!!!!

Here are some quick and easy and CHEAP tips:

1. The first 8 seconds are so important in making an impression. Barbara Corcoran (my RE guru) says that a person usually sizes up your property in the first 8 seconds so you really need to make a great impression. The first place to start is the entrance. I know that we have talked about this before but it is worth repeating. The yard needs to be beautifully inviting with a freshly painted front door and new hardware with a welcoming freshly swept entryway all the time. A great touch that will get people in a positive frame of mind is a beautiful arrangement of flowers by your front door!!!! It says to the customer they are happy here and I bet I an be too.

2. Your house needs to be light and bright. Put a fresh coat of paint in neutral warm inviting colors and get rid of any dark drapes that cut out the light. Some experts even say it is better to have no drapes rather than heavy room darkening drapes. In keeping with making it light and bright replace your light bulbs with 100-watt bulbs. I know that may not be eco friendly but right now I am trying to sell your house not save the planet. One of the number one things that buyers comment on is the amount or lack of light coming into a home. Dark homes rarely attract a buyer!!! Remember you are getting your home ready for the next owner and not yourself.

3. Declutter!!!!! Get rid of things and store them if you must. When you are getting rid of the madness do not neglect your refrigerator and your magnet collection. Although the home needs to have personality it does not need a magnet from every state that you have visited or all your family pics on the fridge. While we are on that subject…. pack up your personal photos and little personalized trinkets. Don’t forget to take your cute little personalized name sign out of the yard and store till you find your new home.

4. One more thing that will cost a little but may save you many dollars down the road is a home inspection. Why wait till you have a buyer to find out what may be a deal breaker. A home inspection is an inexpensive way to find out areas that you need to fix or improve upon. You can ask your Realtor whom she or he recommends.

Remember that first 8 seconds is your time to shine so getting some legwork done up front is a smart investment. One thing that I have noticed when I am working with buyers is that when they have the first impression that the house is well cared for it gives the house more value in their mind and on the opposite spectrum, when the house is a big hot mess they assume that is has less value.

Ask your Realtor what you should do to make your house shine and get those new owners happy with their (hopefully) new home. I will end as I always do by reminding you that, “ The only people we have to get even with are those that have helped us” I bet many of you are on my list.

–
Karen K. Smith
Beachy Beach
Real Estate
karen@karensbeach.com
www.karensbeach.com
850-527-5651
“The only people we have to get even with are those that have helped us”

What is mortgage insurance?

It’s a financial guaranty that insures lenders against loss in the event a borrower defaults on a mortgage. If the borrower defaults and the lender takes title to the property, the mortgage insurer (MGIC, for example) reduces or eliminates the loss to the lender. In effect, the mortgage insurer shares the risk of lending the money to the borrower. (Mortgage insurance should not be confused with mortgage life insurance, which provides coverage in the event of a borrower’s death, or homeowner’s insurance, which protects the homeowner from loss due to damage from fire, flood or other disaster.)

Who is mortgage insurance for?

All home buyers can benefit. It allows them to become homeowners sooner, and it dramatically increases their buying power — excellent benefits from a buyer’s perspective. First-time buyers can use a low down payment to help them afford their first home, or to purchase a more expensive home sooner. Repeat home buyers can put less money down and gain significant tax advantages because they will have more deductible interest to claim. They can also use the cash they would have used for a large down payment for investments, moving costs or other expenses.

What does mortgage insurance do for borrowers?

Without the guaranty of mortgage insurance, lenders normally require a borrower to make a down payment of at least 20% of a home’s purchase price, which can mean years of saving for some borrowers. This large down payment assures the lender that the borrower is committed to the investment and will try to meet the obligation of monthly mortgage payments to protect his investment. With the guaranty of mortgage insurance, lenders are willing to accept as little as 5% or 10% down from borrowers. Mortgage insurance fills the gap between the standard requirement of 20% down and an amount the borrower can more easily afford to put down on a purchase. A low down payment also allows borrowers to purchase more home than they might otherwise be able to afford. Without mortgage insurance, a borrower who has saved $10,000 for the required minimum 20% down payment would only be able to purchase a $50,000 home.With mortgage insurance (and income and credit permitting), the borrower could make a down payment of only 10% and purchase a $100,000 home with the $10,000! Or put $7,500 down on a $75,000 home and use the remaining $2,500 for decorating, investing, or buying a car or major appliance. Mortgage insurance broadens a borrower’s options.

Who pays for mortgage insurance?

Generally borrowers do. An initial premium is collected at closing and, depending on the premium plan chosen, a monthly amount may be included in the house payment made to the lender, who remits payment to the mortgage insurer. MGIC offers flexible premium plans for borrowers:

• Annuals. The borrower pays the first-year premium at closing; an annual renewal premium is collected monthly as part of the total monthly house payment.
• Monthly Premiums. The cost is slightly more than traditional mortgage insurance plans but monthly premiums dramatically reduce mortgage insurance closing costs. Borrowers pay for mortgage insurance monthly as part of their total monthly house payment but only need to pay one month’s mortgage insurance premium at closing, rather than one year’s.
• Singles. The borrower pays a one-time single premium (instead of an initial premium and renewal premiums). Since single premiums are typically financed as part of the mortgage loan amount, no out-of-pocket cash is used for mortgage insurance at closing.

These plans offer the choice of refundable or nonrefundable premiums. A refundable premium allows the borrower the opportunity to receive money back on any unused portion, in the event that mortgage insurance coverage is discontinued before the loan is paid in full. The cost for a nonrefundable premium is slightly less than that of a refundable premium, thereby giving the borrower a small savings. If coverage is discontinued on a loan with a nonrefundable premium, the borrower has no opportunity for a refund.
Is there anything else important to know?

No. Just remember, with mortgage insurance, borrowers can increase buying power, put less money down and purchase a home sooner. It’s as simple as that.