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Mortgage Rates Raleigh and impact of PMI Group shut down on lending

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Mortgage Rates Raleigh and impact of PMI Group shut down on lending is a subject of much discussion among Raleigh mortgage brokers this week. On Saturday it has been announced that one of bigger players in the arena of mortgage insurance has been ordered to shut down two of its main units. Straggling mortgage insurer PMI Group has been ordered to stop issuing mortgage insurance. While details are still emerging, mortgage rates Raleigh and impact of PMI Group shut down on lending creates additional uncertainty and stress to the already bruised housing market.

So what doe it all mean to a potential buyer or a home owner looking to refinance? PMI or private mortgage insurance is a required monthly payment for those borrowers who do not have 20% to put down or have not built 20% equity in their home. Lenders require that you, the borrower, buy insurance that will pay the lender off (or at least a sizable part of the loan) in case you default.

The concern over Mortgage Rates Raleigh and impact of PMI Group shut down on lending is that the fallout of this one company may create a domino effect within the industry. Private mortgage insurance allows borrowers to get in a home with less than 20% down payment. Those entities suffered tremendous losses during the last few years as the housing market suffered unprecedented difficulties. If more private insurance companies go out of business, borrower will have more difficult time getting a loan as they will need to come up with 20% down payment or opt of an FHA loan.

FHA mortgage requires as of time of this writing 1% upfront mortgage insurance payment (can be rolled into the loan) and monthly mortgage insurance premium for at least 5 years. So even if you reach 20% equity in your home in year number 3, you still have to pay 2 more years of mandatory mortgage insurance. Of course, you can always refinance out of FHA loan earlier, as there are no prepayment penalties in Raleigh NC.

PMI Group has a chance to cure itself per NYSE rules, but it will remain to seen what impact it has on the real estate market and Raleigh mortgage industry.

Mortgage Rates Raleigh and impact of PMI shut down on lending is a subject of heated talk within the mortgage community.

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Edyta Rhodes has written 25 articles on Service 1st Mortgage

I am an experienced mortgage broker, Raleigh-based with access to top national lenders. I have over 10 years experience, so I know how to design your mortage loan to fit your overall financial picture. I guarantee to find the best mortgage rate for you. You can find out more about me on Google+ Or you can email me at erhodes@nc.rr.com

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