Are mortgage insurers really dropping premiums due to new tax laws? - Make Money Online

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Are mortgage insurers really dropping premiums due to new tax laws?


The recently passed "Tax Cut and Jobs Act" Law produced a considerable reduction in taxes for several areas, including the area of mortgage loans, for both individuals and companies, so many people are receiving reimbursements for their last year's taxes payments, and companies are considering lowering their rates. So, aremortgage insurersreally dropping Premium due to new tax laws? Yes they are, and we are about to tell you why.


New Tax Laws Benefits the people and the companies

The new tax laws directly benefited the Mortgage Insurance Companies by reducing their tax rate from 35% to 21%, which automatically influences the services offered by these companies, whose can be cheaper without meaning a loss for the company at all.

This is excellent news for both individuals and companies, since 2018 has started with a slight but steady increase in Mortgage Loans interest rates, which makes it more difficult for would-be home buyers to apply for a mortgage, especially if to that high-interest rate fees you have to add the payment of the Private Mortgage Insurance. Motivated to this, in this first quarter of 2018 the home sales market has yielded very few profit.

Now, if Sun West reacted to this procedure as anticipated, the benefit will be as much for them as for the borrowers; since people will be able to opt for cheaper PMI rates and therefore greater opportunities to apply for a Sun West Mortgage Loan. Consequently, both the insurance companies and all the participants in the real estate business may have more customers and the market will take flight again.

MGIC Investment Corp takes the lead

Last Monday, April 9, insurer MGIC Investment Corp took the lead by announcing publicly that they will cut their premium rates, which will reduce from 11% to 24% of the PMI costs, depending on whether the authorization term is of 10, 15, 20 or 30 years. 

It is expected that the other insurance companies will follow suit, since a reduction in rates indicates that the vast majority of people will prefer to choose the companies with the most accessible prices, therefore this company will have a large number of clients, almost exclusively, which can only be competed by the other companies if they resort to the same strategy of lowering their rates. 

Conventional Mortgage Lenders are a great option again

The most difficult obstacle to overcome for the would-be home buyers is to make the down payment, which has a standard rate of 20% of the total value of the house. If someone wants to buy a house for $200,000 then the down payment reaches the $40,000. Not everyone has facilities to pay this sum of money out of pocket.

Thus, the conventional Mortgage Lenders allowed home buyers to apply for the mortgage loan even without reaching the 20% of the down payment, but as long as they accepted to acquire expensive Loan Insurance Premiums. 

The Federal Housing Administration, on the other hand, offers the possibility of applying for a Sun West Mortgage Loan with just to 3.5% of down payment, and some economic Mortgage insurance premiums, so until last year it had become the most affordable option for potential borrowers.

But now that MGIC Investment Corp has lowered its premium rates, and probably other insurance companies do, Conventional Mortgage Lenders are again a great option to apply for a Mortgage.
Are mortgage insurers really dropping premiums due to new tax laws? Are mortgage insurers really dropping premiums due to new tax laws? Reviewed by Dhanur Chauhan on 2:48 AM Rating: 5