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PMI vs MIP

Hello!

Whether you live in Macomb, Oakland or Wayne county, if you purchased a home with less than 20% down recently, you more than likely have mortgage insurance you are paying for monthly. This is a charge that is typically rolled into your monthly mortgage payment and can be found with FHA or Conventional loans. Mortgage Insurance Premium (MIP) is for FHA loans and Private Mortgage Insurance is for conventional loans; they are basically the same thing in that both of their purposes are to protect the lender in case of borrower default.

PMI is supplied by a third party, MIP is supplied by the lender. PMI offers more flexibility in that it can be paid in a lump sum up front or rolled into the monthly payments. PMI amounts vary and can range between .5% of the loan and 2%. PMI, in most cases, is automatically removed at 78% loan to value and can be requested to be removed at 80%. MIP does not automatically drop-off; the loan needs to be refinanced in order to remove the mortgage insurance.

Most borrowers choose FHA financing when getting approved because it is more cost effective in the short term. MIP has two parts in regards to costs. There is an up-front charge and an annual premium. Currently the up-front rate is 1.75% and the annual premium is .85%. The up-front cost is usually financed into the loan because it does not affect loan-to-value and it is likely that the borrower does not have the funds to pay for the up-front charge.

If you are looking to purchase a home, you are probably wondering which is best for you? That depends on your specific situation. The absolute best choice, if you can afford it, is to put 20% down and avoid the mortgage insurance. The next best choice is the PMI due to it’s flexibility and automatic removal once the loan to value is reached and the last choice would be MIP due to the up-front charge and the inability to remove the mortgage insurance without incurring refinancing charges.

Thank you,

Showtime Realty

 

 

 

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Real Estate Is On Fire!

Hi there! It has been a little while since my last post but you’ll have to forgive me; the real estate market is on fire! This is definitely a great time to be a seller and a tough time to buy for all the buyers out there. Here is what we know:

1. The supply and demand is out of balance. Although you may see a few homes for sale, many outdated, out of shape homes are sitting on the market while the average to better-than-average homes are receiving multiple offers within hours of listing.

2. Interest rates are poised to increase, again. The U.S. economy is still showing signs of improvement and that means the FED wants to increase interest rates and curb inflation. This also means buyers are rushing in before the cost to borrow increases.

3. School is out – a majority of the public schools are coming up on summer break and that means families are looking to make a move. We can expect an increase in supply here but a paralleled increase in demand as well as those sellers look for their next home.

4. In this market, if your not buying cash or with a conventional mortgage… you’re not getting anything good. Be ready to put your highest and best offer out there the first time or risk losing the home you envisioned yourself living in.

Until my next post,

Realtor Joseph

810-534-7469

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Market Outlook – 2017

Welcome back!

Real Estate is dynamic – ever moving and changing. Interest rates increased recently and are expected to increase several times, periodically, throughout 2017 according to Federal Reserve Chair, Janet Yellen. When interest rates increase, it means that money becomes more expensive to borrow which effectively reduces your PURCHASING POWER. The fact is that there are still many millennials entering the buying phase in their life, meaning that buyer demand is still available but if wages remain stagnant and interest rates continue to increase, these buyers will be squeezed out of certain markets. The good news is that those homes found in the lower price ranges can see an increase in demand and therefore price from the shift of millennial buyers due to an increase in interest rates; see how that works?

To summarize the above, buying will not slow down but rather shift as Millennial buyers enter the market.

According to an analyst at Forbes, supply is expected to increase but only slightly. Short supply was a big factor to the housing price increase you witnessed in 2016. With only a modest increase in supply this year, we can expect to see continued appreciation of homes into 2017 as sellers maintain the upper hand over buyers due to supply/demand.

Donald Trump comes into play. If the president successfully enacts his promise to increase infrastructure spending, cut taxes and deregulate, the near term consequences could be POSITIVE for the local housing market as money begins to circulate internally from spending and tax breaks and the mortgage industry loosens the strings with decreased federal regulation. Also, investments from Ford, General Motors and Chrysler could definitely impact the local economy as consumers have more discretionary income and an increased consumer confidence.

Overall, we have a positive outlook on 2017.

Realtor Joseph

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What Really Matters When You Want To Sell?

Without taking into account location, architecture style of the house and whether or not it has a basement, let’s take a look at some of the things that matter when you want to sell.

1. The price is right – No matter how magnificent your home is or how hot the market is, if you overprice your home, it WILL negatively affect the sale of your property. As a matter of fact, an overpriced home often times leads to a lower selling price than if it were originally priced right. This has to do with buyer psychology and the self-imposed question: “wow, why is it still on the market… must be something wrong with it”.

2. You never have a second chance to make a first impression – which means that the exterior of your home should be clean, appealing and organized. The exterior of your home is the first thing buyers see as they walk up to your front door. making the exterior of your home appealing does not cost much and could really help propel you to an offer to purchase.

3.Cleanliness – Roughly 75% of buyers list this as the most important part of a home viewing. You should not have dirt, dirty laundry, dishes, etc laying around when potential customers come knocking. Also, the home should smell neutral or have a slightly appealing smell. Many people believe baking cookies accomplishes this, but what if the buyer hates the particular cookies you have just baked? (smell of chocolate)

4. Light – You want your house to feel open and have the ability to be seen. If you have many windows in the home, let the sun shower the interior of your house by opening the blinds. Prior to listing, look around. If your home has any dark rooms, light them up with recessed lights or a low profile ceiling light. You would be surprised how much of a difference this can make.

5. Remove the “home” from the house – this means you should remove personal belongings that make the potential buyer feel like they are a guest. What you want instead is to provide a neutral place in which the buyer can envision themselves calling home. For insttance, remove your family photos from the dresser, hallway, etc.

These five tips can help put you above the competition. Selecting the right agent when listing is also a major key to a successful sale 🙂

Until next time,
Realtor Joseph

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Welcome and Thank You!

First, I’d like to welcome you to my page and thank you for checking it out. I was super excited to bring this website to you after many hours of hard work and thought. Real Estate is near and dear to me; almost embodying the very passion and love I have at my core. The idea came about when I began practicing real estate and noticed I had a natural ability to “get the deal done”. It’s like, I understand this language; but, not only that… it also understands me. On several occasions, I have found a home for my client in an almost LUCKY manner. And, the best part is… my client’s love me 🙂

So, as I sit in my home-office writing this to you, I feel a warmth and an accomplishment we can both share. I know this can be your go-to site for everything Michigan real estate and I ask you to be open and feel free to submit requests or suggestions. I pride myself on being reachable, honest, transparent and having your best interest at heart and I believe you will find value here.

 I hope you have enjoyed your stay and would like to welcome you back again. You can look for my blog posts at

least once a month, with which I will try to share ideas and answer questions.

Yours Truly,

– Mr. Sell Your House