Most people don't realize there are so many ways you can reduce your monthly mortgage payment effectively and quickly. However, most of the methods require good credit and credit score.
Most mortgage loans contain escrow (which is taxes and insurance) and Private Mortgage Insurance (PMI) or MIP (Mortgage Insurance Premium).
Drop your PMI or MIP and some excess mortgage fees
The rules are tougher to get people who are in the bind - get out.
What to do with PMI?
Over 75% of the mortgage loans that are 4 years or newer have less than 10% equity, because you borrowed and borrowed against your single most important investment (your HOME).
However, if you are not over borrowed on your PRIMARY resident, then please look at the information below:
PMI-banks. Show an appraisal that your owe or borrowing less than 80% of the value of the home/property, PMI/MIP would be waived. The rule is now changed. Need a certified appraisal from lenders list of appraisal. 20 % reduction from the original loan amount. Now, some may also have contracts that may say the principal must be less than 20% of the loan amount. I believe this is ridiculous.
MIP is a fee of almost a little over 3.50% (if FHA). MIP is to protect the bank's interest also. It cannot be waived BUT, if you sell within the first 5 years - ask to be reimburse (at least a portion). There is no way of getting it waived even if a person claims disability. It is for the life of the loan. Because of the foreclosures, the FHA also added 2% additional to MIP insurance which is good for 7 years or 1% for the life of the loan. So you will actually see a decrease after 7 years. If the property is sold within the first 7 years, the MIP is prorated and seller can ask for the reimbursement of a portion. 2% within the first 5-7 years and the rest for the life of the loan.
PMI or MIP is 10% for conventional loan of your monthly mortgage payments. It varies between the loan type, the down payment, how does the credit report/score looked when the loan was initiated, processed and closed, and debt to income at the time loan was processed. So, as you can see, there are a lot of factors involved. If you are borrowing more than 80% of the property value securing the loan (involved in the loan), then you have PMI added to your mortgage payments. This portion of your monthly payment has no effect on your mortgage loan, insurance and does not benefit you at all. This is a CLEAR CASH money to the lender at your expense.
Va funding fee is 2.25% of loan bal. financed over 30 years and can't get reimbursed. If 40% or more disabled, then it is reduced and possibly waived. Retired gets discount but active duty does not get discount.
Your Credit = Your Life, Fix It Now! talked about all these and gave you ideas. I suggest you read that.
If your loan amount (principal amount you owe) to value (what your home worth now) is less than 80% or 75% (again depending on lenders), insist that your lender drop the PMI from your monthly mortgage payments IMMEDIATELY. Do NOT rely on the lender to do this in good faith or even make the suggestion to you. You need to insist and push the lender. The cheapest, quickest and simplest way to learn if your property worth over 20 or 25% of the principal amount, call the county or parish Tax Assessors office and ask them about some of the recent real estate sales in your area (called competitive sales-Comp.). In fact Real Estate agents and brokers can do this as well (at no cost to you); as long as they think you may be interested in listing your house for sale with them. The real estate sales within your 2 miles area and in the past one year should give you a clear indication of how much your property may value. However, you must understand there are several rules.
1. Real estate Rule one, two and three. Location, Location, Location. This means no-one should compare a property of a better subdivision with a property of a lower subdivision. If your property is in a subdivision with lower standards, it requires a recent appraisal (lender decides who performs the appraisal).
4. Most lenders require you to pay for the appraisal cost. It worth it. In two or three months, you will make up for that fee when you are released from paying PMI.
Best of Luck
I though you might like this.
Subject: Rare birds
A guy is caught by a ranger eating a bald eagle and is consequently put in jail for the crime. On the day of his trial, the conversation went something like this:
Judge: "Do you know that eating a bald eagle is a federal offense?"
Man: "Yes I did. But if you let me argue my case, I'll explain what happened."
Man: "I got lost in the woods. I hadn't had anything to eat for two weeks. I was so hungry. Next thing I see is a Bald Eagle swooping down at the lake for some fish. I knew that if I followed the Eagle I could maybe steal the fish. Unfortunately, in the process of taking the fish I killed the Eagle. I figured that since I killed the Eagle I might as well eat it since it would be more disgraceful to let it rot on the ground."
Judge: "The court will take a recess while we analyze your testimony."
15 minutes goes by and the judge returns.
Judge: "Due to the extreme circumstance you were under and because you didn't intend to kill the Eagle, the court will dismiss the charges. But if you don't mind the court asking, what does a Bald Eagle taste like?"
Man: "Well your honor, it is hard to explain. The best I can describe it is maybe a combination between a California Condor and a Spotted Owl."