What is PMI?

If you’re preparing to make the transition from renter to first-time homebuyer, you’ve undoubtedly been told by wide-eyed veterans of the homebuying process (or renters who equate homebuying with certain poverty), “Watch out for that PMI.” PM what? PMI, as in Private Mortgage Insurance. It’s a fact of life for homebuyers who put down less than 20 percent on their homes (and with home prices on the rise, that’s most of us). From the lender’s perspective, PMI is a necessary protection. For homebuyers, it’s not likely to be the deciding factor that causes financial ruin; after all, you’ve got your principal and interest, which can make your PMI look like pocket change.

Nevertheless, first-time buyers often experience trepidation when they see that mortgage payment on paper for the first time, so the addition of a PMI isn’t a welcome sight. In short, the PMI adds a weighty cherry to the top of an already overwhelming sundae.
So how exactly does PMI protect your lender? First, let it be said that PMI was designed strictly for your lender’s protection and not yours.

 

Written By: Courtney Ronan. If you would like to continue reading, click here.

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Title Insurance: Who Needs It?

During the real estate transaction (especially if you’re a first-time buyer), you’re hit with so many foreign terms, fees and requirements your head spins. One of those strange and unfamiliar costs is title insurance. In most cases, borrowers have no option—either you get title insurance (among other requirements) or you don’t get a loan.

The lender says you need it, you want the loan to go though, so you buy title insurance. Great. So what is title insurance?

When you buy a home you want to make sure that the people selling it actually have full and legal title. The party who conducts closing will check this out by going down to the local property records office to research the history of ownership.

 

Written By: Courtney Ronan. If you would like to continue reading, click here.

The Appraisal Contingency

The appraisal of a property’s value has become a regularly used residual service by homebuyers in the real estate process. However, it can become a tool that is tossed by the wayside in a hot market — and that’s not very wise when it comes to the largest investment most consumers will ever make.

The appraisal serves various purposes in a transaction for several people. It acts as a financial compass, as it were, for everyone that has a monetary stake in the property value — the seller, the buyer, the lender, and the insurance company.

 

Written By: M. Anthony Carr. If you would like to continue reading, click here.