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
I do count my blessings, but then I end up counting those of others who have more and better blessings, and that pisses me off.~Bob Mankoff New Yorker cartoon caption
Request email delivery
- Jan 19:
The Three Big Lies
- Jan 18:
Two Harvard Grads Still For Trump
- Jan 15:
Of Insurrection, Inequality, And Your Stocks
- Jan 14:
Meanwhile . . .
- Jan 13:
Ronald Reagan Speaks
- Jan 12:
What Do Adelson and Netanyahu Think?
- Jan 10:
Post Trump, Post Truth
- Jan 8:
Mark Twain Weighs In
- Jan 7:
Imagine . . .
- Jan 6:
Will On Pence
- Jan 19: