This was the headline in the Wall Street Journal, and it’s so simple and obvious it’s worth cribbing for those of you who missed it. (Something tells me a fair proportion of the people with mortgage insurance don’t read the Journal.)
As Andrea Gerlin explained (January 16), anyone who buys a home with less than 20% down typically is required to pay for private mortgage insurance. That covers the lender for any shortfall in case of default. Say the bank were owed $120,000 but the proceeds from the foreclosure were only $95,000. Mortgage insurance would pick up the $25,000 difference.
But once you’ve paid down enough of the loan, and/or the home has appreciated enough to give the bank a reasonable cushion, you are entitled to stop paying mortgage insurance (though you may have to pay for an appraisal and, even then, be persistent and determined with your bank).
Are you or is anyone you love paying mortgage insurance? If you don’t know, ask your bank.
Might you be able to stop? If so, it’s just found money, with virtually no downside to you. (The downside would be that the bank might come after YOU for any losses after a foreclosure. But in many instances, that’s unlikely, and in states with “non-recourse” mortgages, it’s not even legal — California used to work that way, and still may.)
Shouldn’t the bank have to notify you of this after you’ve been paying for a few years, and the balance you owe has shrunk to less than 80% of the original appraised value? Yep. According to the Journal, that’s a reform that might be adopted. But in the meantime: check you mortgage.
Quote of the Day
Capital is dead labor, which, vampire-like, lives only by sucking living labor, and lives the more, the more labor it sucks. --Karl Marx Capital as such is not evil; it is its wrong use that is evil. Capital in some form or other will always be needed. -- Gandhi~Gandhi
Request email delivery
- Mar 22:
Pins And Groats — Be It Ever Thus
- Mar 21:
Demand Your Carbon Dividend
- Mar 20:
Success! Why Do New York’s Mayor And City Council Resist It?
- Mar 19:
The Other Kind Of Bankruptcy
- Mar 18:
- Mar 15:
Pete Buttigieg And John Delaney
- Mar 14:
The Fifth Risk
- Mar 13:
Reader Feedback: How About A Stock Update?
- Mar 12:
Eat Drink And Be Merry? . . .
- Mar 10:
Three Podcasts And Those Calls From Belarus
- Mar 22: