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Hi, I'm Ella Gurfinkel, your host of the AskElla Show and senior loan officer at Fairway Independent Mortgage. On my podcast, I cut through the noise to bring you honest conversations about real estate, mortgages, and financial planning.
I interview industry experts to tackle everything from homebuying basics to complex topics like reverse mortgages, trusts, and market trends. With decades of experience, I'm passionate about dispelling myths and providing clear, actionable advice.
Whether you're buying your first home, refinancing, or planning for retirement, I'm here to help you make informed decisions. Join me for straightforward talk about real estate and beyond!
Most people come to me as a lender wanting to put as much money down as possible so they avoid paying mortgage insurance because they think it's a complete waste of money It's unnecessary and mortgage insurance is not their friend Well listen on You're watching and listening to the Ask Ella podcast And today I have the amazing Annabelle Silva with ArchMI And we're going to talk about what exactly makes the MI not your enemy why you need MI and how am I can actually help you the home buyer So Annabelle tell me your story How did you end up in this crazy biz of ours thank you Ella for having me Nobody grows up thinking they're going to be a loan officer or an insurance rep I have the privilege of my previous boss considering me and got me into the RMI space And I think it's important that people have the knowledge of what is needed because it takes all the parties It takes a good loan officer It takes a good title company a good appraiser a good realer and sometimes we forget about the backside with processing underwriting and mortgage insurance is a partner with that So we're a security that helps insure the loan We help underwrite the loan and it gives buyers other options besides VA FHA which are still good options but we have another option that doesn't require 20% down even 10% down You can get in as little as 3% down for that home And it helps you get in faster as opposed to waiting to save for a down payment while prices are rising Good grief girl I mean you you just nailed it and you took the wind out of my sales there for a second So why do So let's start with a probably a dumbish question but I think that's what everybody wants to know Why do I need mortgage insurance because again most people come to me as a lender wanting to avoid it thinking it's their enemy So why why mortgage insurance what is mortgage insurance more importantly and we'll roll into more questions but I think this is the biggest one that everybody wants to know Absolutely And as you said mortgage insurance is your friend It allows you to get into a home sooner with less money down Where FHA is upfront insurance and monthly conventional can be just a lump sum up front It can be a split and it can be a monthly charge that isn't for the life of the loan It is until you build enough equity to get that removed And so it's important because again not every property is going to qualify for FHA Not every condo may qualify for FHA So this is where conventional financing comes in And it is for borrowers who have some money to put down whether that's 3% all the way to 15% but less than 20 So it gives them the availability to our lenders to lend on that and be protected So MI covers the loan the lender so the loan is insured so they feel secure to lend out that money at the less than 20% down payment Thank you for answering that and thank you for that amazing answer So I don't think that a lot of uh home buyers and homeowners actually understand that up until what mid60s they couldn't even buy a home with less than 20% down because mortgage insurance did not exist back then Correct And please forgive me for not remembering the exact year and month and date when the mortgage insurance came into being But effectively back in the 60s when the mortgage insurance was introduced the private mortgage insurance was introduced as a option that's what really opened the floodgates to home ownership in this country because that's what allowed people to come in with very little money down and allowed them to buy a home while protecting the lender the banking institution the investor from the loss Absolutely So it has opened the gates as we said that um you can get into a home without waiting because when we've done the statistics you waiting for the more down payment prices you out absolutely and the increase of the house is exponential so you lost out on the house saving for the down payment which I think a lot of clients are stuck right now they want to save more money in the meantime the prices keep going up so let's say you know just for numbers round numbers sake let's say a typical $400,000 home that appreciates at 5% a year Again I'm taking kind of an average number Not pulling a pie in the sky but it's really appreciation rate is somewhere around 5% nationwide So 400,000 times 5% that's a $20,000 increase in just one year Yes So now instead of 20% if somebody's trying to accumulate the 20% instead of the 20% accumulation for down payment on 400,000 that's 80 Now at 420 you're looking at 84,000 Correct And that number keeps on going up and up and up every year But what also people lose sight of is that not just the homes appreciate now and they need more money for the down payment if they're trying to reach that 20% mark but also now the home price has gone up their loan amount has also gone up So now they may not even be able to qualify for that loan So the waiting game is not necessarily the best game and trying to save up for the 20% down payment is not the best game That's really the bottom line Absolutely The waiting game is never the best option in this market because as you said the rate that it's expanding we can't catch up to it where again coming up with the 3 or 5% is enough to get into a house and it's not even feasible financially Yeah And also if people are selling a home they may not want to put all their assets at the 20% Because as you said things are more expensive So can that go towards furnishing your home can it gorts for landscaping your backyard paying off debts Paying off debt Having a safety net a savings account So sometimes you have to offweigh that We're paying this monthly minimum charge and still having money left over is important And closing costs have gone up Insurance has gone up taxes HOA all these things everything Absolutely So we have to have those reserves And that's why it's important because we never want someone to be house poor to go in and putting every dollar down in their house and then there's a catastrophe awaiting So that's where mortgage insurance gives freedom to the buyers and even though it's like with any insurance you're paying for an in case and so again it's important to just know your options and that's where having a secure good loan officer can review those options They may be a different option whether it's VA FHA or conventional but it's not one sizefits-all There is no such thing There is no two identical scenarios in 29 years of doing this I haven't seen two identical scenarios in my entire career because there's always a zing Yeah There's always something There's always a catch So people can understand better Can you explain exactly what mortgage insurance does because I think that that's where most people will either dear the headlights on me or just simply don't understand Absolutely So private mortgage insurance ensures the loan the lender not the borrower That's your hazard insurance So those are can be very confusing So hazard insurance homeowners insurance protects your home your dwelling PMI private mortgage insurance protects the loan And so again it protects the lender so they're secure of default And it's important to know those differences You also cannot select PMI as the borrower You can select your homeowners That's again where you have your loan officer who looks at that does the pricing and works with us So it's all on the back end but it's very important because if the realer and loan officer don't understand that PMI can kill a deal Yep So they have to know how to ensure that And so that's where if you don't have a seasoned loan officer they don't realize like you said no deal is the same It's different for two bars versus one bar self-employed bars versus one bar Zip code changes everything So if you put a generic quote and then run it through it's a whole different scenario So again that's why it's important to work with a reputable loan officer who knows that because even though we're on the back end were very important piece of that Absolutely And something else that I think catches and we'll come back to this actually and we'll talk in more depth about what drives the cost of mortgage insurance and actually how affordable the mortgage insurance can be which also a lot of people don't realize But before we get into the nitty-gritty let me ask you another question One of the very little understood quirks about the mortgage pricing meaning mortgage rates is that not having PMI putting 20% down actually yields a higher interest rate than putting less money down or putting significantly more at 25 or more percent down So that's where so many buyers and borrowers think that it's completely illogical that the interest rate is higher at 20% And like I said they don't even realize it but I show that to all of my clients up close and personal when I do the number zooms with them and walk them through the numbers So let's talk about that for a second There's no insurance So it's a stronger loan when we have that insurance to the lender and to Fanny May and to Freddy Mack So don't just take my word for it when I talk about it Here you have an actual ami company rep actually speaking the same words that I say except for she said it a hell of a lot nicer because I literally tell people that 80% loan meaning 20% down payment is the first point of no return for the lenders where they literally leave their behind flopping out in the wind without the insurance Absolutely So again there's not that security blanket but then that also takes from your reserves um Fanny Freddy the GSC's they like to see reserves on a file because again if um there's a hazard if something happens in the home if income overtime bonuses changes So things can always happen So having reserves is very favorable in the loan process They would rather see you have some assets left over than putting 20% down So again if you keep on watching by the way we're going to talk about the removal of PMI towards the very end of the video So if you want to know more about that stay with us because we'll get to that subject but we have a lot of ground to cover before we get there Once again just so that everybody understood the security blanket again love the way you put it of mortgage insurance gives you a lower interest rate when you put less money down So as illogical as you thought it may be it actually is not And it's actually a fact that putting 20% down will give you a higher interest rate Putting less money down will give you a lower interest rate And I think that's the importance of that you're thorough Like you said you're giving them all the options for them to then make the decision But sometimes I think clients can be pushed into FHA or they can be pushed into 20% And it's really important like you said because every client is different is just letting them know what does it look like with 10% down if you were going to put 20 and then you can furnish your house and have savings What does it look like at 15% down and then if the seller doesn't pay the closing cost that you thought you'd have money left over what if the appraisal comes in lower and you still want the property and you have that appraisal gap where you have to ensure more of the house and that's where MI will help you So maybe you were going to put 20% down the appraisal came in higher or lower and now you have to adjust that loan to value So again I think it's great that you know that because you've been in the business and that is going to be the differentiating factor for your clients is going over their options because sometimes I think they're just handed this option and they don't break it down in the long term like you just did I feel like usually it's not just the less experienced loan officers I also feel like it's more the bank loss and the call center loss that are not really about doing the options They're more about the turn and burn The more transactions they close the more they make so they don't really care as much Do you think that's true or what's your feel on that i think um that can be in all fields but yes it's taking that extra step because you're right it is going to be more information more thorough but if we're keeping the client's best interest you're absolutely right We need to take the extra time because you never want someone to come back and say "I didn't know there was an option of 5% down 3% down." And every time we do a study we're astonished how many people still believe you need 20% down It is insane Insane and they think first-time buyers is 3% down but that's not necessarily the case So there's a lot of education needs to happen So thank you for making this podcast Thank you for making that information available because as much as we're out there they're trusting you And so you're the one sometimes but you're the one delivering this information So if the loan officer just doesn't know they don't know but they don't know So that's why it's important that we go over every scenario so that we're putting each client in the best scenario for them One of the mortgage insurance related questions or issues that arises when I talk to clients is the client not understanding that there is more options on mortgage insurance than just your garden variety as I call it monthly mortgage payment Again some of it is experience some of it is having the expertise on what we do having honed that expertise over decades over many many years where what is the best option asking the right questions asking your long-term goals asking how long you're going to be in the house to present you with the options to consider And this is where the comment comes up with clients over and over and over again especially over the last probably 5 years is nobody ever told me that there were other ways to pay mortgage insurance besides the monthly So I know you've already touched on the monthly the split and the single So absolutely So bring that home Yes Okay Literally let's bring it home right to owning a home Love that So the most common is monthly and that will again depend on the loan to value the down payment the credit score zip code That is the most popular and easy to go to But yes there are other options especially when builders or sellers are paying all of the closing costs You can pay it up front with the loan and then avoid that monthly And Arch is also known for the rate star buy down which is customizable MI It doesn't have to be a 50/50 split So what does that mean on the LO side is if you have money left over you want never want to leave seller concessions on the table and you've already bought the rate down you've put things into the closing you can add that to the rate star buy down and then bring down the monthly so it's a split you can also if you're struggling with debt ratio the MI's just making that debt ratio because you know once you go above that 43% it starts up and so maybe paying off a credit card isn't feasible to bring down the debt loan maybe paying off obviously a bigger loan isn't going to be feasible but paying down the MI might be the best option for you And then you can see where you need your debt ratio You go into our website and you toggle with it and then you see okay if I want my MI to be X dollars this is what I need up front So it's again not one sizefits-all and what's feasible for never is but it's again giving the loan officer options and a different monthly payment If they're really struggling with paying that MI and the borrower just feels really frustrated with it I understand that Just like you shop homeowners insurance you can look at the different We as loan officers shop across what six mortgage insurance companies and we actually pull up all of the options all at one time So we pick the one that actually will do the trick Now it doesn't always I know you're with RMI the rest of them are your competition but nobody's ever the lowest or the lowest every time but it's also true just like with anybody with anything else The lowest MI does not guarantee that MI approval Absolutely And what's the turnaround time yep What are the red flags what are the conditions that our underwriters are going to find we have seasoned experienced underwriters on staff that will pick up the phone if you if they see something that's not panning out that could blow up later for you They would pick up the phone Ella Hey we're seeing the income change These assets don't add up So there's things that we're going to catch that we don't go So it's again responding quickly when you say "We need that rush We need that closing We have a short close." That you know your MI rep just like you know your realtor your title rep you pick up the phone and say "Annabelle let's work through this." And that I think that that's the difference too is having a true partnership where we all want to grow this community and help fund more loans Absolutely Now one of my favorite tricks in the book is tricks in a bag and mixing it up Yes Secret sauce Yeah Secret sauce is the single premium mortgage insurance and not necessarily paid by the seller because most of the time we're already tapping out all of the seller credit but it's uh more of the single premium mortgage insurance that we actually wrap into the loan meaning it's financed single mortgage insurance premium And typically anywhere from like 6% down on it does the trick It wipes out same thing with qualifying it wipes out the monthly mortgage insurance It's wrapped into the loan Yes it bumps up your loan amount slightly but FHA does that already I mean that they have their upfront mortgage insurance premium that adds into it and you have the monthly portion here We're taking it all into the single premium wrapping it into the loan with a bow and now you don't have a mortgage insurance monthly payment line So that actually helps you qualify So that's been again one of my secret sauces over the last years where it's tight on qualifying especially with the current rates and especially with the current home prices And when you combine the two it's a recipe for disaster sometimes So that's one of the ways to actually get more home or the home that you want versus the home you can qualify for So that has been one of my favorite tools And again not too many people talk about that option and not very many I don't know that a lot of loan officers actually understand the advantage of it but I know for a fact realtors don't know enough about it and the general public the consumer even less so So when I start having that conversation that you have options that's where everybody goes well nobody ever told me And I love that you said wrap it in a bow right because it's a one and done You pay it up front and that's going to give your buyers the advantage So if they're de that maybe that helps them qualify for a few thousand more And right now when you are so competitive and buyer so every bit helps So if that allows your bar to afford more house because they can have a higher monthly payment that is going to differentiate them from another buyer So again it's going over those options You know we always start off we're going to buy this house but then we see this other house and it's a little more and then everything's more in it right the property taxes are more the HOA is more the homeowners So you're fighting for every dollar in that monthly payment So if that they want that extra little bit more house that they weren't planning on that's where MI can also help you because again you can lower the down payment or pay for it up front So that's going to give your buyers the advantage of you knowing your secret sauce those tools to help you and it makes a huge difference actually Not to mention that when you do a break even analysis on doing a single premium financed versus paying the monthly payment usually break even is somewhere around 3 and 1/2 years I mean it's always give or take 33 to 42 months I mean it's like it never fails I run the numbers and every freaking time it's about the same It's about three and a half which is less than three to three and a half years and it does make all the difference in the world Absolutely And I think that's the difference like with buying the rate down with points you're doing it already So sometimes they just need to apply that math to like you said to the MI math That's a great analogy I like never thought of using that in terms of explanations and they're doing it already So it's just again like you said changing that concept of MI changing the stigma of it It's a very important part of lending It's a great option Again it just gives your buyer more things to choose from and then they have um the ability to see what works best for them and that's going to change throughout the process We know that like we said you know they're going to be adamant that they were going to put 10% down but then again things change the property changes the offers So you knowing the the save the deal in a sense if that's your ratear buy down with the MI customize if that's upfront it's again looking at options as the loan process changes because like you said it always does It always does Sometimes it started out with the pass A and end up on the pass Y Yeah ABCD everything Absolutely So everybody knows how to calculate their payments online presumably and everybody's seen those payment calculators when you go look at home on Zillow Redfin on Realtor.com or use an online mortgage calculator and all of those spit different numbers when it comes to mortgage insurance So case in point talking to a buyer just about a month ago having a conversation about mortgage insurance and how to avoid it They were telling me that they you know they really didn't want to pay the two three or whatever $100 per month it was I'm like well how did you come up with that number what you're seeing online on Zillow on Redfin and I'm not knocking either because they are kind of giving you not quite the worst case scenario but they're kind of giving you the upper side of the the spectrum Mhm Forget what you saw First of all I'm going to provide you with my payment calculator and it's going to be a lot more accurate But also I'm going to run the pricing for mortgage insurance because again just like everything else in the mortgage realm there are no static numbers Nothing is one sizefits-all Everything is customized to you the buyer specifically based on a number of factors And I've seen the mortgage insurance monthly even being as low as 79 bucks a month on a $500,000 loan but then I've also seen it as high as $600 a month on the same size of a loan Let's talk about what affects those monthly and as a result single premium or split premium rates because again this is where the conversation usually takes a turn into the completely unknown territory for most buyers until I start breaking it down to them that mortgage insurance will be driven by a number of factors I can't tell you how much is going to be upfront pun intended as upfront premium or monthly premium without plugging it into the mortgage insurance calculators The only one that's standard well two that are standardized are FHA and USDA Those FHA is 0.55 annualized factor or 50 depending on how much money you're putting down and the 1.75 upfront MI that's financed into the loan or as I referred to before wrapped into the loan with a bow USDA has a similar concept 1% wrapped into the loan and.35 annualized that translates into a monthly payment but on the conventional side on the private mortgage insurance side there is no such standard everything is literally hella individual so what drives the cost of mortgage insurance and I know you mentioned a couple of times but let's take a deeper dive and list all of the factors so that actually the buyers have a better understanding ing of what goes into it and what can affect it so they can actually tighten their budgets Yeah And be in the know Well and I think is that's a good point that you made is going online is not going to give you that information even with homeowners insurance with hazard insurance or PMI So those are the two unknown variables and it's good that you said that because that can be way off and that can completely affect the loan So just we have some similarities to hazard insurance but there are some big differences So of course the main thing is the property type Yep Whether you're buying an investment property a vacation home a primary residence down payment are you putting 3% versus five versus 10 15 you're going to see those increments completely change And it's 5% It's 3% down for conventional and then it goes in 5% increments until basically you hit 85% meaning 15 down or 20% down 80% loan to value So on the mortgage side we look at everything actually comparatively backwards because we look at the loan to value portion not your down payment correct portion So the property type how much down payment you're putting Obviously credit score is going to affect you And then again the zip code that's going to change for every property Self-employment is going to change because that's a different type of loan normally than a W2 employee And self-employed is perceived as more risk obviously Yes Unfortunately it is the truth Self-employed people are not well okay red-headed stepchildren of the mortgage industry I'm sorry but I'm the first one to admit it And we all know that somebody who's self-employed will usually is somebody who's got entrepreneurial spirit will always bounce back and figure their way back home Whereas somebody with a W2 job once they're let go it may take them forever to actually Yeah And that's a back And that's why industrywide though self-employment is considered to be a risk factor And I think that's what's also good about MI is there's layers Yep So we don't just say selfing Absolutely So we don't say self-employed high risk No we look at the layers of it We look at a couple of things Exactly And also how many bars in our case two bars is stronger That's the piece I actually never understood Yeah I was waiting for you to say that because that is the piece I do not understand to save my life because I've seen it firsthand where we'll add a spouse who does not bring anything to the table income wise yet So we don't and yet the mortgage insurance drops and drops considerably when you bring in a second person even if they have no income to bring to the table Um as long as our credit is the same or better or better And I think it's the philosophy of two heads are better than one There's a family there's a risk Yeah So I think statistically we've seen that that that's just a stronger file So I don't know about in your time doing loans but we always kind of try to do less So if one borrower qualified we kind of left it at that but it's different on our side So if there are two borrowers they have similar credit score I always suggest running that quote because that might make a difference with that So see once I've learned that I start plugging that in Yeah But that's a fairly recent actually discovery I mean we're talking just you know a handful of years as opposed to you know 20 some Yeah Again property type is important Down payment is important credit score is important and then if you have two borrowers and then self-employment versus um W2 employee there's another big one Yes So those are all layers And again what type of loan are we looking for investment second home or primary residence So when you're entering that matrix it's very important again that you have a detailed loan officer that marks all the correct boxes because those numbers can change And it's the same when you request a hazard insurance if you're saying this is primary residence versus a second home If you're saying it's a condo versus a single family home So again you have to have a loan officer who is inputting the right information and it's going to give you the most accurate close estimate to the insurance quotes So there is one more factor that you didn't touch on that I wanted to ask you about and I've seen that one factor by itself Yes it's a layering Yes it's an onion But this factor has thrown me for a loop as well because it plays a huge huge role in this very stiff increase in the mortgage insurance cost and that is the debt to income ratio Oh absolutely It changes dramatically Absolutely I've noticed that if the debt to income ratio is below 43 it's a Yeah it's good down payment decent down payment and good down payment in my book is 5% or more Credit scores let's say you know the higher the better but 740 and up But then once you start tweaking the debt to income ratio that's where I see the mortgage insurance skyrocket Well and that's with anything So you can have an approval run it through the automated system and then your debt ratio changes and it won't matter if you have an 800 credit score sometimes So debt ratio is a big factor in all of it It's important that you talk about that and it's good that you're explaining that because sometimes people look at their whole overall debt as you know and it's not it's the monthly payment So you can have a smaller credit card but an astronomical interest rate and that monthly payment can affect you more than that larger loan that you thought of Or you can have a small loan that you took out for three years and now your payment is up here because you want to pay it off faster Great But it's killing you when it comes to and I think that's where the mortgage industry has changed and people have to acknowledge that you have to fit every piece of the puzzle as we see there So it doesn't matter that you just have good credit It doesn't matter that you just have assets If the debt ratio is out of balance it brings the whole file down So that's in your approval that's in your interest rate and yes that's absolutely in your mortgage insurance So it's again you guys loan officers having that discussion and the importance of stopping their homeowners's insurance the importance of where their debt is and understanding that in the process because they'll say "Oh I need to pay this off because it's the biggest debt and yet it was the smallest monthly payment and it did nothing for their debt ratio." And that's also where conventional financing has an advantage of "Okay instead of that 20% down what does it look like to pay off the highest monthly liability and then put less down?" So you're absolutely right Once you're over the 45% debt ratio it is going to be harder to finance It gets the the more costly it is So it's multiple factors and it's once again not one sizefits-all because there's been multiple instances on my files where we start out with a quote for mortgage insurance at X Mhm And then something changes in the process a piece of the income doesn't get approved or the buyer doesn't have as much money down earned reserves as we originally planned on Life happens but that also happens to be changing the mortgage insurance factor which of course that in turn affects the total payment and the total qualifying Yeah absolutely And I think you'll find similar that what you're seeing on the loan process you're going to see on the MI side If it gets riskier for you it gets riskier for us So once your debt ratio goes up or the property changes your automated underwriting can change your approval process can change the amount of reserves can change So we're we work hand in hand There's really nothing that's going to be a big flag for us that shouldn't be for you because we work hand in hand with that And so we're seeing the same things you're seeing So when you see something change on your side most likely you're going to see a change on our side And what you see stronger on your side you see stronger on our side So of course if we see longevity if we see good payment history we work hand in hand There really shouldn't be opposing ends to that We're all going towards the same goal And so when you see something change on your side you're going to see it on ours But you're absolutely right Debt ratio is a tough one right now especially in this economy And so it's important to have those conversations upfront And I'm glad you're doing this before tax season because so many people want to rush out and pay something off And so it's like I always tell them don't pay anything off until you talk to us Absolutely And that something that you know we need to educate is just hold on to it and then let us look at your whole picture and then let's look at what works because again they just hear you know approval they just hear down payment they just hear debt ratio and they don't really know how that breaks down It's like buzzwords exactly and how that's going to affect their whole process So I'm glad that you're doing this before tax season and people get a down payment sometimes through that or pay off debt But yes the biggest thing is don't do anything until you talk to your loan officer and then let's see where you fall and how we can work that loan in your best interest One of my not so favorites I was going to be very sarcastic but chose not to And sarcasm is my go is when financial advisors some financial advisers financial planners advise clients also to put 20% down It's like educating even the financial adviserss and financial planners that the 20% down does not necessarily get you to where you want to be Mhm Sometimes putting 15% down but getting a better rate and doing a single premium mortgage insurance buyout or finance single premium makes more sense Absolutely And I think that's the narrative That's what you're saying Like we need to change that narrative because how many parents told their kids oh don't buy until you buy 20% By that means you're not going to buy a house for 10 years or more or 20 years So we're changing the narrative and it's so important that we have this education So again thank you for offering this because that is the difference of being a homeowner now versus a decade from now So we need to change that narrative of you need 20% down you have to have perfect credit score you can't be self-employed you can't be a single I mean there's so many narratives that are out there that are just aren't true And the 20% is the huge stigma that we all are trying to educate because the important is to become a homeowner as quickly as you can because you're going to gain the longevity of building equity but also the sooner of removing MI as well Exactly So the piece of the the recording the piece of the video that everybody is on the edge of their seats for I know this is such an amazing exciting topic mortgage insurance I mean come on right but the reality is that everybody who has mortgage insurance wants to know at what point they can get it removed So the rule of thumb has normally been about 20% equity Now we know with the market changing that can vary from 2 years to 3 years But the biggest indicator is through your serer your lender So you would contact them directly and they would set that up and request that from us So let me put a pin in it for a second Let me repeat that so that everybody hears this loud and clear It's not the mortgage insurance companies that dictate when the mortgage insurance comes off It's the actual lender i.e technical term serer but really it's whoever you write your monthly mortgage payment to Now lawwise your mortgage insurance private mortgage insurance will drop off automatically when your loan to value meaning the balance of the loan that you have as compared to the original purchase price that you financed on gets to 78% Meaning you have to have a 22% equity in the house That is the point where mortgage insurance is going to drop off absolutely automatically without you having to do anything about it At 20% equity you can request removal of mortgage insurance but you have to do so from the company the lender that you're making the mortgage payments to because they decide based on what Um so well said Ella Thank you for clarifying that for the bars So the lender will then reach out to us and request the cancellation and that's up to each lender They may look at the payment history They may run an appraisal They may run a comparative analysis So they're going to look at what the values because you may think your value is something but what do the comparables show So that's going to be your biggest indicator But we're insuring the lender not the borrower necess So that's why the lender has to decide that They're always welcome to call and ask questions of course but it is going to be up to their service or their lender to request that And some people also may do what's called a rematurization So they sold another property came into a lump sum of money and now they want to reamatize their loan That's so there's a recast recast Absolutely So again they would go to their lender serer and say can I put this money down you don't want to refinance it because maybe you got a great rate but you want to change the term of the loan the monthly payment of the loan remove it my so those are all again why it's important to have a good relationship with your loan officer because you know their situation they're pending a sale they're changing careers like so many things can happen that change it from when you first buy the home but again if you have a loan officer you trust you can go to them and say this is where I'm at but this is where I think I'll be in a year or 6 months and then you again can present those options cuz how many people don't know that and so that property ends up selling a second property they have and now they have a lump sum where they can put the rest of the 20% down So you can request it before they hit that loan to value So the bottom line again is and thank you so much Annabal for explaining that because not many people consider that everybody is all about right now instant gratification unfortunately but there's a lot of planning that can be done to get you into a better position and a little bit of effort Absolutely But the bottom line is that when you ask me as a loan officer when you can remove your MI I'm going to give you it's probably one of the very few times when I'm going to give you an absolutely canned standard answer 78% loan to value 22% your equity That's when it drops off 20% equity 80% loan to value is when you can request cancellation At what point you can do that will be determined by the lender Talk to your lender Request their mortgage insurance cancellation packet I can try and help you translate that from mortgages into English sometimes into Russian into Spanish or Spanish but it's entirely up to the lender the good old days of I'm going to reappraise my house send the appraiser into the lender and get the mortgage insurance removed in 2 years 3 years whatever which that happened prior to the crash That was happening right and left That is no longer the case because guess what happened in the crash so many lenders let people remove mortgage insurance and then the crash happened and then those homes forclosed and the lenders were not protected by the security blanket of mortgage insurance and that's what caused the change in all the rules all across the board and everything that's real estate related and it's like you said it's all across the board I think it's also as you mentioned having accurate information Yes there is a lot of information out there but check the website Like RMI does a really good job of having materials for the consumers as well as the loan officer And what is that website rmi.com Perfect And there's the home buyer guide that's free that they can download in English and in Spanish But I think it's important even for realators to see because sometimes the borrowers will ask them Yep And like you said everyone has their field of expertise I by no means will give loan information That's up to their loan officer vice versa the realtor has replaced but go to the MI web page It'll go to the source Exactly Go to the source So archmi.com has the cancellation policy has the home buyer So there's things on there It explains income So there's so many great tools for the loan officer and for the consumer free of cost So we want to give accurate information and get them as well prepared as we can to be a homeowner That is awesome That is probably the best piece of advice that you can get from my videos so far Like bar none I so appreciate you coming Annabelle I so appreciate you talking through it Is there anything else you want to say about MI again like you said earlier MI is your friend We're here to help you And so again it's changing that narrative Just being educated knowing what your best option is and not listening to your neighbor or your friend or even your parents on what their option was because everyone has a different scenario Oh some idiot expert on TV Well if they're an expert they're not an idiot Some of those TV experts are idiots Okay Well we're not I bet us we're not on TV So it's again working with credible honest people good loan officers like yourself who aren't just pushing numbers through It's walking and getting to know you individually and what your best scenario is and running those different options with you And as a consumer your uncle scenario may not be your scenario Yeah And as a consumer don't be afraid to ask Don't be afraid like you said what is MI when can I cancel it why is FHA what is VA what is USDA what can I do what program what house fits it's going through that with you What does 5% look down versus the 10% what is my overall what are your goals in your house one house may be ready to go Another house may need landscaping What are your family situations yeah What is your family situation like I know personally I have a daughter in high school who's going to be driving and I may need to put less money down on something as opposed to a couple years or when she was a toddler So that's where you get to know your client and you give them the best scenario And so it's asking those questions and getting the information from the loan officer the source as you said not just what you're reading or hearing from other people That is awesome Again thank you so much I really appreciate you sharing your knowledge and paying me such high compliments I appreciate that But it is all about educating It's all about getting the true information the correct information out to the world because there is so much misinformation and so many myths and misconceptions out there that I'm just trying to tackle like one myth or misconception at a time And mortgage insurance has been probably the most mysterious and shrouded in darkness subject that most people just want to avoid But there's really nothing scary It's just a tool and a useful tool just like so many other tools So that's where expertise like yours comes into play And again thank you so much for joining me today Thank you for having me Absolutely See you on the next one