Mortgage Insurance

When you think of the different insurance policies your family has to carry, if your like me, you start to mentally add up the premiums for these different policies, lose count, and then just decide what does it matter, I have a well insured family, and this is a Good Thing. Most of these policies are something you need and can't afford to be without. However, there are some insurances you can definitely live without, and mortgage insurance (also known as private mortgage insurance, or PMI) is one of them.

Mortgage insurance (not to be confused with homeowners insurance) is a premium you pay monthly to protect the lender against your default on the loan. It can be quite expensive (easily $100 a month or more on larger loans), and does you no good whatsoever. Mortgage insurance is required on most loans that exceed 80% of the value of your property. So for example, if you purchased a home for $200,000 and you put 10% down and borrowed the remaining 90%, or $180,000, you may be paying mortgage insurance premiums.

In recent years, many loans were structured to avoid mortgage insurance even if you didn't have the full 20% down, such as by taking out a second mortgage for the additional 10% in our above example. But this is a relatively recent trend, and not everyone who qualified for this money saving strategy was offered it.

So when you get your next monthly mortgage statement, check and make sure there isn't a charge on it for mortgage insurance. If there is, call your mortgage person and ask if there are any options available to you to eliminate it. It never hurts to ask.

Carl Trawick is a Mortgage Specialist and Licensed Mortgage Broker with the firm Access e*Mortgage. He can be reached at 904-343-1145 or ctrawick@nefcom.net

www.carltrawick.com