FAQ

Home FAQ

Frequently Asked Questions

What is PMI?

Since 1999, lending institutions have been obligated to cancel a borrower’s Private Mortgage Insurance (PMI) at the point his mortgage balance (for loans made past July of ’99) goes down below seventy-eight percent of the price of purchase, but not at the point the borrower’s equity climbs to more than twenty-two percent. (This legal obligation does not cover some higher risk mortgages.) But if your equity rises to 20% (no matter what the original purchase price was), you have the legal right to cancel the PMI (for a mortgage that past July 1999).

What is Escrow?

To finalize the sale of the home a neutral, third party (the escrow holder, a.k.a. escrow agent) is engaged to assure the transaction will close properly and on time. The escrow holder ensures that all terms and conditions of the seller’s and buyer’s agreement are met prior to the sale being finalized, including receiving funds and documents, completing required forms, and obtaining the release documents for any loans or liens that have been paid off with the transaction, assuring you clear title to your property before the purchase price is fully paid.

What is a "rate lock period"?

Freezing the Rate

A rate “lock” or “commitment” is a lender’s promise to lock in a particular interest rate and a particular number of points for you for a specified period during your application process. This protects you from getting through your entire application process and finding out at the end that the interest rate has gotten higher.

Rate lock periods can be various lengths of time, between 15 to 60 days, with the longer spans typically costing more. A lender will agree to lock in an interest rate and points for a longer span of time, such as 60 days, but in exchange, the rate (and sometimes points) will be more than that of a rate lock of a shorter period.

More Ways to Save on Interest

In addition to choosing a shorter lock period, there are more ways you can score the best rate. A bigger down payment will result in a better interest rate, because you’ll have more equity at the start. You may choose to pay points to bring down your rate for the loan term, meaning you pay more up front. One strate

Can I Eliminate Private Mortgage Insurance?

Since 1999, lending institutions have been obligated to cancel a borrower’s Private Mortgage Insurance (PMI) at the point his mortgage balance (for loans made past July of ’99) goes down below seventy-eight percent of the price of purchase, but not at the point the borrower’s equity climbs to more than twenty-two percent. (This legal obligation does not cover some higher risk mortgages.) But if your equity rises to 20% (no matter what the original purchase price was), you have the legal right to cancel the PMI (for a mortgage that past July 1999).

Keep a record of payments

Analyze your statements often. Pay attention to the prices of other houses in your neighborhood. If your mortgage is under five years old, chances are you haven’t made much progress with the principal, it’s been mostly interest.

The Proof is in the Appraisal

Once your equity has reached the required twenty percent, you are just a few steps away from cancelling your PMI payments, once and for all. Call your lender to ask for cancellation of your PMI. The lending institution will require proof that your equity is at 20 percent or above. Most lenders require a state certified appraisal documented on the form: URAR-1004 (Uniform Residential Appraisal Report) to determine your equity and eligibility for cancelling PMI.

How do I get the best possible mortgage?

Call one of our licensed and experienced loan officers today! We will discuss your individual situation and goals, then shop the nation’s best lenders to get you the best mortgage for your unique needs! Remember, unlike a bank, brokers employ licensed loan officers trained to find you the best deal possible at a variety of lenders.

Still Looking For Answers?

Still have a question? Contact us and we will answer any remaining questions.

SOUTH COUNTY MORTGAGE

With over 20 years of experience, we ensure you get the best service you deserve.

(401) 583-4150