On Wed, Jan 01, 2003 at 04:07:17PM -0600, Julia Thompson wrote: > OK, Erik, I just went and looked over some mortgage statements from > when we had our original house loan being serviced by Fleet and we > were getting wonderfully detailed statements. On our mortgage, we'd > make a payment; a chunk of it would go towards the interest, a chunk > would go into an escrow account, and the rest would be applied towards > the principal. The escrow account would them make payments that look > to be the sort of mortgage insurance you're talking about. (The other > things that the escrow account would take care of were the homeowners > insurance premiums and the taxes, county, school and, after we were > annexed, city.) The monthly insurance payments went down gradually > over the course of 7 years.
What percentage of the home price was your down payment? What percentage of the home purchase price do you currently have in equity? > I don't think you can not pay into mortgage insurance, if it's > determined that you ought to have it. So the option of *not* having > the mortgage insurance may not be available in many cases. M.I. is required for less than 20% down-payment, from everything I've read. I did read an article that said that sometimes people continue paying the mortgage insurance when they don't really have to (they've reached 20% equity or whatever). You might want to check to see if you can legally stop paying it. > And the consequences of default, besides making you a very > unattractive borrower for a number of years, may include the > increasing in premiums for other customers. Seems that's what > insurers do on everything *else*, anyway.... There are probably > regulations on it preventing too much of that, though; you might want > to find out something about that before you do anything. It is interesting about what Dan said about the US government bailing people out (S&L crisis, I didn't make the connection before). I've read a number of articles that speculate that the government would not allow Fannie Mae or Freddie Mac to fail, even though they are private companies. It seems that in the mortgage and mortgage insurance business, some people are counting on the government if things go really bad. Perhaps more so for FNM & FRE than for MTG, since the former are much larger and also not trading at such low prices, so I think Mr. Market considers the mortgage buying industry more stable than the mortgage insurance industry. > You might look at other companies in that business for comparison. Already did that. MTG is the biggest and purest play, but there are a few others (eg, PMI). They are similar in price. > And *do* try your best to understand the business before you put any > money into it; and use that rule of thumb for all your investments. Don't worry, I always do my DD before investing. I'm not going to invest based solely on a thread on Brin-L! :-) It just that sometimes the financial statements and analyst reports don't exactly cover things that are perhaps considered "common sense" but which isn't so common to me since I've never had a mortgage. Thanks for the reply. -- "Erik Reuter" <[EMAIL PROTECTED]> http://www.erikreuter.net/ _______________________________________________ http://www.mccmedia.com/mailman/listinfo/brin-l
