Dianne Drinkwater, Berkshire Hathaway Homeservices Florida Network RealtyPhone:
Email: [email protected]
Email: [email protected]
Image by Charles 🇵🇭 from Unsplash
Part of buying a home is researching the market and your finances. Most lenders require you to put at least 20 percent down or pay private mortgage insurance (PMI). Since PMI is a cost that does not lower your interest rate or principal, it’s almost always better to save up that hefty down payment. Lenders charge PMI to cover some of their risk if you do not put the 20 percent down to create equity. Conventional loans backed by Fannie Mae and Freddie Mac always require PMI if you do not put 20 percent down.
In some cases, you could avoid PMI by taking out a special loan or a VA loan. VA loans are only available to veterans, but require very little down or even zero down. The VA doesn’t actually give you the loan—it insures your loan against default. Conventional loans not backed by Fannie Mae or Freddie Mac often have higher interest rates. These two programs are also government-insured loans.
Other reasons to avoid paying PMI include:
Tax laws change every year. As of 2017, PMI was no longer deductible, which means that you lose that offset.
The lender is the only beneficiary. If you should die before your loan is paid off, it will pay only the lender and only for the balance on the home.
You pay PMI until the equity on your home reaches 20 percent. If the market was good when you bought the home, but it tanks a couple of years later, you could be stuck paying PMI for many years.
Some lenders require you to pay PMI even after the equity in your home reaches 20 percent. If you do have to take PMI, always read the fine print.
Finally, PMI is difficult to cancel. You will need to write a letter to your lender to cancel the PMI. Until you hear from the lender, you will be stuck paying those premiums every month.
PMI ranges from .5 percent to 1 percent of the amount you borrowed paid out in equal monthly payments every year. Thus, a loan amount of $200,000 could have a $2,000 per year PMI premium, which is about $167 per month added to your mortgage payment until the lender agrees to cancel the premiums.
In addition to saving for a down payment, you may qualify for some down payment assistance programs such as the first-time home buyer’s program. These programs help you get that 20 percent so that you do not have to pay PMI. If you have a retirement account, you may be able to use money from that account to help with a down payment.
Though it may seem painful to pay such a large chunk of money, it saves you from paying insurance premiums and it lowers the cost of the loan since you don’t pay interest on the down payment and it is applied to the principal.
Dianne is a full time, full service, state licensed Realtor®, member of Northeast Florida Regional Association of Realtors® (NEFAR), St. Augustine/ St.Johns County Board of Realtors, National Association of Realtors® (NAR), Florida Association of Realtors® (FAR), and Northeast Florida Regional Multiple Listing Service And St. Augustine/St. Johns (MLS), Shearwater Certified, and Military on the Move Designation.
She provides a unique blend of leadership, sales acumen, project management, technology, and world class customer relation skills to enhance Watson Realty Corporation's values in the real estate sales and mortgage marketplace. She is a decisive take action solution-oriented professional with 25+ years of progressive business experience who efficiently utilizes technology to improve results. She has lived in the St. Augustine/Jacksonville area since 2005 and has seen the area continue to flourish and stays well informed of future growth plans within Northeast Florida.
Let's take a look at the lighter side of Dianne. She loves life is artistic loves music, the arts, yoga and genealogy! She loves to explore and hates to be bored. She loves the outdoors, especially plant life and wildlife. She has been a Master Gardener in Florida and Maine; as a photography enthusiast she has the eye to spot the perfect shot, which spills over to the photos she makes of the properties she markets AND frequently hires the best specialized real estate photographers/drone and videographers who make the difference in the sale. And, she loves to share her knowledge of the local real estate market and all aspects of the process to guide you through each step as a coach rather than a salesperson.
So, let's sum it up. Buying or selling your home is an important life decision. Reasons can vary greatly from change of lifestyle, to relocation or life challenges. You need someone you can trust, count on, respect and help shoulder the stress, anxiety and time commitment involved. Doesn't this sound like someone you want working for you?
So, what's the next step? Contacting Dianne of course. It is all about YOUR needs, goals, timeline and DREAMS! She's here to help you achieve them and she looks forward to hearing from you.
What are you looking for in a Realtor? - Someone who will really listen to your wants and needs? Someone who will expertly market your home until the SOLD sign adorns your front lawn or if you are a buyer tirelessly researches your wish list to find that perfect home? - How about someone who will always be honest, holds ethics in high regard as a realtor, who works aggressively to get you the best price for your home and someone who knows the market?
Selling or buying a home is a partnership with your trusted advisor- Dianne Drinkwater