Are You Eligible To Get Rid Of Your PMI Payments?

If you're currently paying Private Mortgage Insurance (PMI) and have been for several years, it may be time to petition your lender to have the PMI payment removed.

PMI protects lenders from homeowners that stop making payments on homes with small amounts of equity. It's an insurance policy that is "cashed in" if the homeowners defaults.

However, federal law allows homeowners to petition the end of PMI if their loan-to-value (LTV) drops below 78%.

An example of 78% LTV is a home that is worth $100,000 on which $78,000 is owed to mortgage lenders.

If you are paying PMI and think you are eligible to have it removed, contact your mortgage lender and ask them about their procedure to remove PMI.

The lender may require that you have your home appraised (at your expense) and that may cost anywhere from $200 to $400 -- but if your petition is successful, the cost of an appraisal is still less expensive than the ongoing monthly cost of PMI.

The Week In Review (May 30, 2007) : What To Watch For

Mortgage rates continued their climb higher last week as markets dealt with contradictory data about the health of the housing and the economy.

New Home Sales registered its biggest gain in 14 years while Existing Home Sales reached a 4-year low; and purchases of "big-ticket" items such as computers, appliances and furniture unexpectedly jumped while the inventory of homes for sale rose to 8.4 months.

It's enough to confuse even the most experienced investor.

As a result of the data, traders postponed their expectation for a Fed Funds Rate decrease and that helped push mortgage rates higher on the whole.

This week should provide little relief from mortgage rate volatility.

Tuesday's Consumer Confidence revealed how consumers are feeling in the face of record-high gas prices and today's FOMC Minutes unmasked the inner discussions of the Fed's meeting earlier this month. Both can have a moderate impact on mortgage rates.

Friday, however, is the big day -- we'll get three major reports:

• Personal Consumption Expenditures: The Fed's preferred inflation gauge
• Personal Income and Outlays : A look at American savings and spending habits
• Non-Farm Payrolls: May's jobs report, including unemployment

All three releases on the same day, and into a nervous market, give this the potential for an Economic Perfect Storm. Expect extreme rate volatility heading into, and through, Friday.

(Image Courtesy: Warner Bros)

Saving A Nickel May Have Cost You A Dime

This cartoon by Wiley applies to mortgages in 2007 like it did to stock trading in 1999.

The least expensive mortgage options aren't always the least costly. A quick look at the Sunday paper's Foreclosure Notice section can verify that.

The right loan at a fair price saves far more money than the wrong loan at any price.

Enjoy the long weekend everyone!

Why You Should Re-Pre-Qualify Yourself Today

If you're in the process of buying a home and are working without a rate lock, take notice: over the past two weeks, mortgage rates have spiked to their highest levels since November 2006.

Your actual mortgage payment will be higher than you originally anticipated.

Depending on your preferred mortgage product, rates have increased by as much as one-half of one percent.

Mortgage experts expect the surge to continue over the next 30 days, at a minimum.

If your mortgage pre-approval is dated prior to May 9, call your lender and ask him to re-run it using today's rates and market conditions. If you don't have a pre-approval yet, today would be a good day to get one.

How Lenders Protect Against Losses When Mortgage Markets Deteriorate

The graph at right shows the path of mortgage rates in May. The rate run-up continued yesterday.

After a fairly tame start, yesterday's action rapidly slipped away from mortgage rate shoppers beginning at 12:00 P.M. ET.

Many lenders responded by invoking their right to a mid-day reprice as well, with some adding as much as 0.25% to their prices.

A mid-day reprice signals rapid changes in mortgage market conditions. They don't happen everyday, but on days like yesterday when the market deteriorates as quickly as it did, lenders don't like the idea of offering interest rates that are "below market" rate.

When you consider that we're talking about banks, this is a concept that's fairly easy to grasp.

Unfortunately, though, when markets take the opposite course and improve rapidly, lenders are not so quick to mid-day reprice; they'll usually opt to just wait to embed the changes in the next morning's rate sheets.

Again, when you consider that we're talking about banks, this is a concept that's fairly easy to grasp.

It's the old adage: mortgage rates take the elevator up, but take the stairs down.

If you received rate quotes yesterday morning and did not lock, be sure to check back in today -- your quoted rate will be higher.

(Image source: Bankrate.com)