Trinity: 'Soundest investment you can make' [The Decatur Daily, Ala.]

By Ronnie Thomas, The Decatur Daily, Ala.
McClatchy-Tribune Information Services

Dec. 19--Like the Somerville and Priceville areas of Morgan County, Trinity's residential housing market is growing.

Realtor Leighann Turner of RE/MAX believes the reason is that people want to be closer to the industries near Trinity.

She also believes U.S. Department of Agriculture Rural Development Loans have fueled growth in Priceville, Trinity and Somerville.

"Most people didn't know about the program, which has gained in popularity the last couple of years," she said. "They are zero down payment with low private mortgage insurance. Until two months ago, there was no PMI at all. Now it is still much less than any other mortgage."

Turner said area residents have been fortunate compared to surrounding states and larger markets.

"I think it's because of our industries," she said. "Our real estate is still the soundest investment you can make."

Kent Hollingsworth developed Mountain Cove subdivision off Mountain Home Road in Trinity and has 16 of 44 lots left in the subdivision. He said he has finished 17 homes.

Hollingsworth said a lot of Lawrence County residents are moving into Mountain Cove.

Trinity Mayor Vaughn Goodwin is excited about his town's future.

"We think we're going to start seeing more movement in residential building in the spring," he said.

Two other older subdivisions along Mountain Home Road, Blakely Estates and Hidden Creek, offer opportunities for homeowners.

Jason Owens continues to build in Stone Village beside West Morgan Elementary School on Old Alabama 24, and lots are available in Greenway Place at Ghost Hill and South Greenway drives.

In addition to residential building in Trinity, Goodwin has another reason to be positive.

"We just got our first walk-in, sit-down restaurant since Mountain Top Cafe on Old Alabama 24 closed years ago," he said.

Dirt Road BBQ opened last week in a seven-business strip mall on Gordon Terry Parkway.

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(c)2011 The Decatur Daily (Decatur, Ala.)

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How To Avoid Mortgage Insurance?

Avoiding mortgage insurance is not always an easy thing to do, especially if the borrower is financially strapped. However, it can be done. What exactly is mortgage insurance? There is several mortgage-related insurance—mortgage protection insurance and private mortgage insurance (PMIs), to name a few. However, we will only be elaborating on PMIs when we use the term “mortgage insurance.” Mortgage insurance is therefore an insurance coverage that is required on the mortgage of a borrower who is putting less than a 20% down payment toward the purchasing price of a home.

Therefore to avoid paying mortgage insurance, a borrower must put down 20% or more toward the cost of the property. There are lots of other ways to avoid paying mortgage insurance, though. Another way to side step the extra expense is by taking out a second loan, sometimes called a piggyback loan or second mortgage that closes simultaneously with the first mortgage. The second loan can normally be a home equity loan or a home equity line of credit provided by the lender or lending institution.

By paying a little extra each month toward the mortgage payment, one can dramatically reduce the principal of the loan faster, which will facilitate the removal of mortgage insurance if one was used in attaining the mortgage in the first place. When 20% or more of the mortgage has been paid, a borrower with mortgage insurance can contact the lender of the mortgage and request a removal of the mortgage insurance. By law, the lender is required to remove the mortgage insurance when requested by the borrower, providing that 20% or more of the mortgage is paid.

Refinancing a home loan with a lender who does not require mortgage insurance can also help a homeowner do away with or remove mortgage insurance from a mortgage. People with good credit can ask their lenders to exempt them from paying mortgage insurance. Most banks are willing to work out deals with borrowers who have excellent credit because it makes good business sense. People with good credit are less likely to default on loans and are less risky for banks or other creditors. So lenders will be more apt to take a chance on credit worthy people and will be more than willing to wave the mortgage insurance requirement.

To conclude, avoiding mortgage insurance is not the easiest thing to do, especially when there is a limited in available funds. Banks and other lenders usually require borrowers to pay mortgage insurance when the down payment is less than 20% of the purchasing price of the home. However, there are many ways to get around paying mortgage insurance. Paying more than 20% down toward the purchasing price of the home and paying extra on the mortgage each month, so the principal can be paid down quickly are some of the ways people avoid paying mortgage insurance.

Analysts see fragmented mortgage insurance industry

The struggling private mortgage insurance industry is more fragmented than ever, as companies grapple with elevated levels of underwater mortgages and loan delinquencies, according to one equities research firm.

The Bedford Report released its latest outlook for The PMI Group (PMI: 0.21 0.00%) and MGIC Investment Corp. (MTG: 2.37 0.00%) this week.

The analysts who wrote the report are bullish on MGIC, despite the stock being down about 75% this year. The outlook stems from the company's main operating unit writing more new insurance in August, while the number of bad loans under MGIC's roof fell from July.

The analysts maintain a bearish outlook for The PMI Group, which was pulled under the umbrella of the Arizona Department of Insurance last month and forced to stop writing new business. The company also faces possible delisting from the New York Stock Exchange because its stock price has traded at less than $1 for more than a month.

Analysts last month suggested PMI's struggles could boost the market share of other mortgage insurers in the near-term.

Private mortgage insurers represented by the Mortgage Insurance Companies of America wrote $4.9 billion in new business in July even as some companies struggled with falling stock prices and uncertainty about liquidity levels.

The Bedford Report analysts report the trade group said the private mortgage insurance industry has raised more than $8 billion in new capital since the beginning of the credit crisis a few years ago, "which is a testament of investor confidence in the industry's ongoing role in the marketplace."

Insured at a high price

The strategy To work out whether I need mortgage insurance on my home loan.

Do I need to do that? Mortgage lenders will typically insist on mortgage insurance if you borrow more than 80 per cent of the value of your home. On the plus side, it means you can get into the market sooner by buying now rather than waiting to save the full 20 per cent deposit. However, this has to be offset against the cost of the insurance, which can run into thousands of dollars. Depending on your lender - and how good a credit risk you are - you might be able to borrow as much as 95 per cent of the property's value with mortgage insurance.

But many borrowers mistakenly think mortgage insurance covers them if they default on their loan. It is designed specifically to protect lenders losing money from defaults; it doesn't cover borrowers.

Advertisement: Story continues below So how does it work? You pay a one-off, upfront premium for the insurance, usually organised by your lender. The cost can often be included in your loan balance, so you pay it off over time. If you default on your loan and the lender doesn't recover the full amount owing when it sells your home, the lender can claim the difference from the insurer. If you want your own insurance, another product is available, known as mortgage-protection insurance, which covers mortgage payments in the event of death, sickness, unemployment or disability. However, you'll need to weigh up the likely benefits against the costs involved.

How much does mortgage insurance cost? It depends on your loan, how much you borrow and your deposit. The chief executive of RateCity, Damian Smith, quotes costs of about $4500 for insuring a $270,000 loan for a $300,000 property. He says the costs increase as you borrow more, with insurance costing about $17,500 for someone buying a $600,000 home with a 10 per cent deposit. Insurance can be more expensive for first-home buyers. GST and state stamp duty might also be payable on the premium.

Ouch! That seems high. Can I take the insurance with me if I switch lenders? Generally not. Smith says mortgage insurance costs are one of the biggest barriers to refinancing a home loan because your insurance policy will be cancelled and you might have to apply for fresh insurance cover with your new lender. If you've built up enough equity in your home before you refinance to get under the 20 per cent limit, you shouldn't need insurance on your new loan. However, if you still need insurance, expect to be charged the full cost by your new lender.

Both Australia's main mortgage insurers, QBE and Genworth, say a partial refund might be available if your loan is terminated in the first year or two. But this will depend on the arrangements made between your lender and the insurer. In some cases, no refund may be allowed in exchange for a lower upfront premium. You should check with your lender about this.

As part of its bank-account switching measures, the government will require lenders to provide borrowers with a fact sheet on mortgage insurance when they take out a home loan from July 1 next year. The fact sheet will set out the costs and benefits of the insurance and allow for a comparison of premiums and rebates. However, the government says it won't force the industry to allow borrowers to transfer their insurance if they refinance because of the complexity involved.

Many home insurance policies do not cover digital downloads

Music fans could be at risk of losing out financially as the majority of home insurance companies do not cover digital downloads, according to a recent study by Which?

The study by the consumer watchdog found that a third of leading home insurers’ standard policies fail to offer any form of protection, even though over 100m tracks are downloaded by Brits every year. Those that do offer cover generally limit it to around £1,000.

According to Which? only four providers, including HMV Digital, Play.com, 7 Digital and Tesco Entertainment, allow customers to re-download lost music . However others, which includes the popular iTunes, say in their terms and conditions that: "Products may be downloaded only once and cannot be replaced if lost for any reason".

Which? CEO Peter Vicary Smith said: "It's surprising that, at a time when the popularity of digital downloads is soaring, insurers aren't offering music lovers the protection they need. People who buy a lot of digital music should double check their home insurance policy to make sure downloads are covered. If they're not, we'd recommend switching to a provider that has entered the digital age."

How to Get Mortgages For Bad Credit

For people who want to pay off their debts and increase their credit score, they can always look for mortgages for bad credit. It is a loan which is derived from the home equity accumulated over the years in your home. This kind of loan can be quite beneficial for you since it can lower interest costs and monthly payments. It also consolidates your debts so that you can only pay once a month.

The two most accepted choices for bad credit mortgage loans are cash in mortgage finance and a home equity mortgage. These mortgages count on your equity, which will then be used to manage your debts. When you consolidate your debts, it can be arranged to combine all of your credit card payments, auto loans and other related debts into one easy monthly, lowered interest payment. In due time, you will notice that your credit score is improving.

When you apply for a bad credit mortgage loan, you need to increase your down payment as well as your cash reserves. A lower credit score means more money to pay for down payment. Credit scores below 600 require around 5% down payment. Lenders need to have confidence that you can still pay your loans even if you’re going through a financial situation.

You can always have the option to do your own research on this type of loan.

Mortgage Protection Insurance

A large amount of UK homeowners never consider mortgage payment protection insurance (MPPI) when taking out their home loan. Although MPPI is not compulsory it should be a priority for anyone with a mortgage.

For people who might have stretched themselves financially with their mortgage it is probably even more important to be covered in the event of unforeseen unemployment. Good policies will cover any bills related to your mortgage - including interest and repayments.

The State benefits for people in this situation are limited and they are means tested, so if you have savings you would be expected to use them first. Payouts can also take around 9 months to be made.

A good MPPI policy will start to pay one month after you are out of work (either through illness or redundancy) and typically last for 12 months. The one-year period is the time expected to be taken by people to find other employment or recover from illness or injury.

Insurance payments should start once you inform your provider that you're out of work and this is verified. Payments are usually made directly to your mortgage lender, although in some cases payments are made to the customer.

Although costs can vary between different providers, it is usually by a small amount. On an average mortgage payment of £650 a month, cover sold by most banks and building societies would cost about £450 a year.

Most people tend to buy MPPI from their mortgage lender at the time of the transaction or through a broker/adviser, but it can be bought as a stand-alone product from any provider. A list of MPPI providers can be obtained from the Association of British Insurer's website.

As with all types of insurance available, remember to shop around and be wary of lenders who insist on selling you their insurance.

Home Equity Conversion Mortgage Saver Offers 0.01% Loan Rates

In late 2010, the Federal Housing Administration launched a new type of reverse mortgage called a Home Equity Conversion Mortgage Saver, which reduces most of the 2 percent up-front insurance rate that borrowers have to pay from standard federal backed loans.

However HECM Saver – is offered only to homeowners 62 years old and over. The Saver’s up-front premium is only 0.01 percent. This up-front premium difference is huge, particularly as the loan rate increases. The current yearly fees that borrowers have to pay are similar as for an average reverse mortgage of 1.25 percent of the loan’s existing balance. Although Saver borrowers are limited only to borrow 10 to 23 percent less than the average version permits.

A perfect applicant for the HECM Saver is a senior citizen with a permanent income or resources who has long-term needs further than the need for temporary money. “The HECM Saver is ideal for their situation because there are enough proceeds [to do so],” says Beth Paterson of Reverse Mortgages SIDAC, St. Paul, Minn.

“The HECM Saver is a breakthrough product that will enable more seniors to access the advantages reverse mortgages can provide,” says Eric Declercq, national sales lead for reverse mortgages at MetLife Bank, Bloomfield, New Jersey. “It increasingly will become an important financial planning tool for America’s senior population looking to use the equity built up in their homes to finance a comfortable retirement.”