What is private mortgage insurance?

Private mortgage insurance (PMI) is required when a household’s down payment on the purchase of a property is less than 20 percent of the appraised value or sale price. The purpose of PMI is to protect the lender in the event that the buyer defaults on the loan. While PMI charges can vary, they are typically about one-half of 1 percent of the loan amount.

The price of PMI depends on the loan to value and the borrower’s credit score, according to Bob Walters, chief economist at mortgage lender Quicken Loans based in Detroit. A higher loan to value and a lower credit score will increase PMI fees. For example, a borrower who has a credit score of 680 and secures a $200,000 mortgage with a 90% loan to value may pay approximately $128 per month in PMI. That same borrower would pay $98 per month with a credit score of 750.

PMI makes it possible for those borrowers who can afford the monthly mortgage payment but do not have a sufficient down payment to get into a house of their dreams. While some feel that PMI is a necessary burden, households should keep in mind that paying the added mortgage insurance need not be forever, reports FoxBusiness.

Here are the best options for reducing or removing PMI over the course of the loan term.

  • Pay off 20 percent of the total loan amount.
  • Order a reappraisal of the home if you believe that the value has gone up since the original assessment.
  • Refinance your loan.
  • Opt for lender paid mortgage insurance, where the lender agrees to waive PMI in exchange for the borrower paying a higher interest rate over the life of the loan. This alternative makes sense for borrowers who plan to sell their property within the next ten years, since lender paid mortgage insurance cannot be cancelled.

An additional benefit for households making an adjusted gross income of under $109,000 is that they might be able to deduct PMI on their federal tax returns if they secured the loan in 2007 or later for a primary or secondary residence (provided that it is not a rental property), according to HouseLogic. Consult with your mortgage and tax professionals for more information on PMI.

Oh My Aching Back: Cabinet Heights to the Rescue

When approaching a kitchen or bath remodel or new construction, you can make things a lot more comfortable by getting creative with the heights of your base cabinets.
Standard heights traditionally have been 36” tall (including the thickness of the countertop material) for kitchen base cabinets, and 29” – 30” tall for bathrooms. These heights are good overall, but are surely not set in stone and can make life a lot more comfortable with some tweaking.
Consider the users’ heights when deciding on cabinet heights. If everyone in the household is tall, consider having the main area of the kitchen raised an inch or so. Chopping will be much more comfortable that way, and it will help avoid arm and back fatigue. If household members are various heights, consider having one area raised higher and another area at the standard height. If you have someone who requires lower heights, such as a wheelchair user, consult a design professional to assist with their particular needs.
In the bathroom areas, consider the primary users when determining the best heights. The master bath would likely serve adults, so having the base vanities at a taller 34” height will help to avoid stress on the users’ backs when utilizing the sink for face washing and tooth brushing. If a child uses the area, keep a small step stool handy for those times. A main hall bath outside the children’s rooms could have the standard height. If the children are a bit older (and taller) and you intend to remain in the home longer than a few years, consider the taller height there too for when the children are taller, as they do grow quickly!
Just a few adjustments can make for happy backs, and aren’t difficult at all to achieve if you plan ahead.

March Perspectives

Rarely does a day go by that one of us doesn’t get asked if this is a good time to buy or sell a home. Some people might think that our response is always an emphatic “YES!” because we work in real estate. But there really is no right or wrong answer. Everyone’s situation is unique, so in some cases the answer might be yes, but for others it might make more sense to wait.

  
The good news is that we’re finally coming out of the housing slump of the past five-plus years. Housing is a major driving factor of the U.S. economy, so regardless of whether or not you own a home, a stronger housing market is good for everyone. For some would-be home sellers, this positive momentum, combined with a rise in home prices and buyer activity, is enough to compel them to list their home. And right now the numbers appear to be on their side.

  
According to the Northwest Multiple Listing Service, there is currently a 1.2 months’ supply of homes in Seattle. “Months’ supply” basically means that if existing homes were to continue selling at the current rate, the inventory of homes would be sold by that many months. A “normal” market has about six months of supply; therefore lower numbers mean a shortage of inventory. If demand is greater than supply, this leads to a seller’s market, like we’ve seen in Seattle.

  
So what does this mean for buyers and sellers? It means as long as inventory levels and interest rates are low, competition amongst buyers will remain high, and home prices should continue to steadily rise – albeit at a healthy rate, not like what we saw during the housing boom.

  
With these types of projections, one might wonder why there isn’t a flood of homes coming on the market. The biggest concern we hear from many would-be sellers is that they’re going to lose money because their home is worth less today than it was at the peak of the market. A valid concern, to be sure, but remember, you’re buying and selling in the same market conditions, so if your home has lost value in recent years, it is almost certain that the next home you buy has as well.

  
It goes without saying that nobody wants to sell at the bottom of the market, yet at the same time, everybody wants to buy at the bottom. Obviously these two scenarios can’t exist at the same time, but for those on the fence, we’re here to tell you that there are definitely opportunities to be had by both buyers and sellers that are worth considering.

Fear of Commitment? Choosing the Right Colors for Your Home

One of the most frequent questions interior designers hear is how to choose colors for a home. We all love color, but some people are afraid of using color in their home. Many find they fear committing to a certain color scheme or making a mistake after it is all done. Here are some ideas to help to get you started.

  
To try to determine just what colors to use in your home, look in your closet! You’ll see the basic wardrobe classics in there: black, brown, navy, beige/khaki. Those colors are neutrals and very applicable in your home color scheme. Now, check out the colors hanging there, too. Unless you are a serious fashionista, a certain color or two will emerge as a standard in your color preference repertoire. Even prints will feature similar colors. These colors are a great place to start to help you decide what colors to use in your home. If you love wearing certain colors and feel good wearing them, you will enjoy seeing them throughout your décor.

  
Lest you feel the need to paint an entire room tomato red (or whatever color you find that you prefer), just paint the walls a nice warm taupe or other neutral that you like and use the tomato red as an accent color with some of your accessories such as throw pillows, lamp bases, art on the walls or throw rugs. You can even practice with some inexpensive items you might find at a tag sale or discount store before you commit with higher priced items. Give it a try and don’t be afraid to keep working at it.

Baby Boomers Have Home Builders Rethinking Home Design

The baby boomer generation, which is currently estimated to be aged between 48 and 67 years old, comprises almost one-third of the nation’s population. The demand that this lucrative segment of the population has on housing is causing homebuilders to rethink how they design homes. In fact, the National Association of Home Builders (NAHB) has a 50+ Housing Council which focuses entirely on the housing needs of aging baby boomers.

  
A study commissioned by the NAHB suggests that baby boomers and older homebuyers want a maintenance-free lifestyle that frees them up to travel, socialize, and pursue other activities. Perhaps this is why real estate professionals report an increase in the number of baby boomers who are interested in condominiums and townhomes. There is also growing popularity for luxury units because they appeal to empty-nester baby boomers who no longer want the maintenance of a single family home, but don’t want to scale back on certain features and amenities either.

  
Homes that are specifically designed for aging clientele often incorporate what is known as “universal design” which allows anyone to function within the home, whether it’s children, an elderly person, or someone who is wheelchair bound. Universal design compensates for a reduced range of motion that often times comes with aging homeowners. For example, electrical switches and thermostats should be placed no higher than 48 inches above the floor and outlets no more than 27 inches—this puts them within the reach of virtually anyone. Likewise, the use of Lazy Susans, rolling carts under counters, pull-out shelves, and height-adjustable shelves make items more accessible. The height of counter tops must be within reach of all household members sitting or standing. Other features might include installing fold down benches in the shower, dual handrails, and raised toilets to compensate for decreased balance and coordination.

  
Universal design compensates for reduced strength by adjusting tension to assist with opening/closing windows and doors. Installing C or D shaped loop handles on drawers and cabinets and using easy gliding hardware for drawers also assists weaker individuals. Berms, ramps, and wider doorways with lower thresholds help with mobility and agility. Single-story homes also offer increased accessibility for aging homeowners—in fact, builders say that 75 percent of the homes they build for the 50+ market are single story.

  
The end goal for organizations like the NAHB’s 50+ Housing Council is to encourage the construction of more homes that can be adjusted over time to homeowners’ needs, so that they can live comfortably, safely, and independently as they age.