Real Estate Mortgages: Be Aware In Your Mortgage Shopping
Termites are a major pest throughout much of the world that homeowners are feared to be infested
. But there is another thing that brings more fear into the heart of homeowners and that is the prepayment penalty. A prepayment penalty is a penalty enforced upon a borrower who pays off the loan before or much earlier than was originally agreed. Borrowers are avoiding this thing to happen as prepayment penalties can be as high as the total of your six-month interest on your entire mortgage. Although not all mortgage lenders impose prepayment, still it is best for you as home buyers to avoid mortgage offers that include this kind of penalties when shopping for mortgages. You can negotiate with your lender, if impossible, and perhaps you can prepay a certain amount every year without penalty or prepay just 20-30 percent of the total loan amount without penalty.
Aside from prepayment, many people as well do not understand Private Mortgage Insurance (PMI). This is mandatory required to all borrowers that loans are above 80 percent of the property value. If home buyers wouldn't typically be able to pay the 20 percent upfront cost this insurance is also required. The 20 percent down payment is just a proof to know if the borrower is financially sufficient, and for those who can't, the PMI policy that lenders required will cover up in case of default on loan happen. In reality the primarry and only purpose of mortgage insurance is to protect lenders own interest and not the buyers.
Borrowers are trying to keep away from PMI for reasons that it will create a negative impact on this side as they will be looks undesirable in the lender's eye and monthly expenses will increase due to PMI premium. Instead of paying the whole amount of upfront cost others are just paying less and pay for PMI. And supposedly part of the down payment money is used to remodel the home after they have it. Home remodeling will definitely increase the value of home that typically brings you more cash in the house.