PMI rates in Winter Haven, FL and across the nation are higher today than they were six months ago and the rising number of defaults makes it likely that rates will rise again soon. As PMI rates increase, so does the cost of homeownership for people whose lenders require it.
Private Mortgage Insurance (PMI) is a mortgage lender’s insurance policy against highly-leveraged homeowners. It’s typically required when homeowner equity is less than 20 percent at the time of closing.
With PMI defaults up 40 percent over last year, though, private mortgage insurers are taking big losses.
They’re also taking outsized steps to prevent additional claims going forward and that is bad news for low-equity homeowners and home buyers.
The First PMI Change: New, Higher Insurance Rates.
Like home insurers that adjust premiums after a worse-than-expected storm season, PMI insurers are raising mortgage insurance rates for all homeowners, regardless of credit history. The higher premiums are meant to offset the higher losses.
And, the second change is that some PMI firms are discontinuing coverage for “high-risk” transaction types. This includes purchases of non-owner occupied properties, and cash out refinances above 85 percent loan-to-value.
Both changes, however, point to similar conclusion about home loans: Home equity is increasingly important for today’s homeowner.
I hope you found this post useful! As always, if you or anyone you know is in need of a local Florida mortgage loan originator, I’m your guy. Call me at 888-859-7418 or apply online for your Florida mortgage. We’ll keep you posted and let you know when it’s time to pull the trigger!
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