DEAR BOB: I have been making mortgage insurance payments on my home loan for 11 years. The bank tells me I need to make these payments for the life of the loan. But friends have told me that is not true. What are the facts? –John O.
DEAR JOHN: The answer depends on the type of home loan you have. If you have an FHA home loan, it is virtually impossible to get the FHA mortgage insurance premium cancelled by your lender. No FHA mortgage lender in their right mind would give up the FHA mortgage insurance benefit.
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The only way to get rid of the obviously unnecessary FHA mortgage insurance premium is to refinance your mortgage with a lender who doesn’t require mortgage insurance.
However, if you have a conventional mortgage and you have more than 20 percent home equity, most lenders will cancel PMI (private mortgage insurance) premiums if you have an on-time payment record and if the mortgage is at least 24 months old.
RECOMMENDED BOOK ON LIVING TRUSTS
DEAR BOB: I am most interested in avoiding probate costs and delays for my heirs when I pass on. Some time ago, I recall you recommended a book on how to do your own living trust. What is the title? –Celia C.
DEAR CELIA: I think you are referring to the great book “Make Your Own Living Trust, 7th Edition” by attorney Denis Clifford. It is published by Nolo Press and is available in stock or by special order at local bookstores, public libraries, and www.amazon.com.
HOLD BACK COST FOR UNCOMPLETED NEW HOME EXTRAS
DEAR BOB: I have a contract to buy a brand new home that includes a second driveway. The builder says he will be unable to have the driveway completed by the closing date. The amount of money he wants to hold in escrow is 20 percent less than the two quotes I have from contractors for the driveway. What should we do? –Stephen B.
DEAR STEPHEN: You are very wise to hold back an amount at least equal to the lowest acceptable bid you have for the second driveway.
Before your home sale closes, you have maximum leverage with all the power. After the sale closes and the builder gets most of his money, you have virtually zero negotiating power.
If the builder wants to get the sale closed on schedule, he will agree to let you hold back the estimated cost for the second driveway. For more details, please consult a local real estate attorney.
The new Robert Bruss special report, “How to Earn Your First Profit When Buying Your Home or Investment Property Right,” is now available for $5 from Robert Bruss, 251 Park Road, Burlingame, CA 94010 or by credit card at 1-800-736-1736 or instant Internet PDF delivery at www.bobbruss.com. Questions for this column are welcome at either address.
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