Keys & Credit
The no-fluff real estate and mortgage podcast that helps you make smarter moves with confidence.
Hosted by Realtor Bill Jerikovsky and Mortgage Lender Barb Miller, this show cuts through the jargon and industry hype to bring you honest, practical insights on buying, selling, and financing homes. Whether you're a first-time buyer, seasoned investor, or just trying to decode your credit score—Bill and Barb keep it real with bite-sized episodes.
💡 Real answers. 🙅♂️ No sales pitches. 🏡 Just straight talk on homes, loans, and everything in between.
New episodes drop weekly.
Subscribe and get the facts you actually need to own your next move
Barb Miller NMLS ID: 329237
Guaranteed Rate, Inc. dba Rate, NMLS #2611
Bill Jerikovsky RE/MAX RESULTS
This Podcast is edited and produced by Kody Hughes - Focal Point Media
FocalPointKody@gmail.com - 320-224-9828
Keys & Credit
Understanding PMI: What Every Homebuyer Needs to Know
Tired of paying that mysterious monthly fee labeled "mortgage insurance"? You're not alone! In this eye-opening episode, we tackle one of the most misunderstood aspects of home financing: mortgage insurance.
Mortgage insurance exists primarily as protection for lenders when buyers put less than 20% down, but it's often a necessary stepping stone that makes homeownership possible without requiring massive savings. We break down exactly how much you can expect to pay (approximately $150-175 monthly on a $350,000 home with minimal down payment), and more importantly, how these costs vary based on your credit score, down payment amount, and loan type. Did you know that conventional loan mortgage insurance costs less as your equity increases? Or that FHA mortgage insurance typically remains for the life of your loan unless you refinance?
The conversation moves beyond basics to explore strategic approaches for eliminating this extra payment. From waiting for automatic removal at 78% loan-to-value with conventional loans to leveraging home appreciation (typically 3-7% annually) to reach equity thresholds faster, we explore every angle. For homeowners considering refinancing to escape mortgage insurance, we provide clear guidelines on when it makes financial sense—look for at least a 0.5% interest rate reduction to offset closing costs, especially when you could save $150-250 monthly by eliminating PMI.
Whether you're a first-time homebuyer trying to understand all the costs involved in your new mortgage payment or a current homeowner looking for strategies to reduce monthly expenses, this episode delivers practical, actionable insights from decades of mortgage experience. Listen now to transform your understanding of mortgage insurance from confusion to clarity, and discover options you might not know existed for your specific situation.
0:00 Introduction to Mortgage Insurance
2:10 What Is Mortgage Insurance and Why
6:08 Mortgage Insurance Costs and Calculations
10:26 Removing Mortgage Insurance
14:31 Refinancing Options and Considerations
17:13 The Value of Experience in Lending
Welcome back to keys.
Speaker 2:Hold on Sorry.
Speaker 3:I was talking Wow.
Speaker 2:Our producers. Welcome back to keys and credit. You're no fluff, no nonsense. Real estate and mortgage podcast. I'm Barb, your local hometown lender, and here is my co-host, bill.
Speaker 1:Co-host bill the noble realtor, yeah, yep, what are we talking about today, barb, I think we're going to talk about mortgage insurance.
Speaker 2:What is it? We're going to talk about mortgage insurance.
Speaker 1:What is it? We're going to talk about lending stuff. This is great. So this is all Barb's area here, yeah.
Speaker 2:So mortgage insurance? Well, so if you're putting less than 20% down and you're buying conventional, you're going to have mortgage insurance.
Speaker 1:Okay, Is that mortgage insurance on every sort of loan, whether it's FHA, USDA, conventional VA?
Speaker 2:VA does not have any mortgage insurance.
Speaker 1:Okay, we'll come back to that.
Speaker 2:USDA does have a monthly. It's called a guarantee fee, but it's similar to mortgage insurance. Fha has mortgage insurance as well, and so does conventional if you're putting less than 20% down.
Speaker 1:Okay, so when it comes to mortgage insurance, how much is it?
Speaker 2:Well, if you're buying with conventional financing, it depends upon how much you're putting down and it is also based on your credit score. And if you are a first-time home buyer and if there is two applicants on the application, that will determine how much your mortgage insurance is per month.
Speaker 1:So this is all stuff you figure out as you're doing a pre-approval Correct Right. So if someone comes in and says, hey, I want to try and buy this house, you get all their stuff. You get them approved for, say, fha Yep, okay, they're 3.5% down.
Speaker 2:You'll figure out what their mortgage insurance is going to be with their pre-approval price is going to be with their pre-approval price Correct, right, okay, yep, yep, and it will be factored in on their payment because within their payment, there's going to be principal and interest repayment of the money that one's borrowed. Yep, there's going to be hazard insurance, which is homeowner's insurance as well.
Speaker 1:Hazard is homeowner's insurance, barb's getting fancy now.
Speaker 2:There's those two terms that are thrown out, and so it's either going to be referred to as hazard insurance or home insurance, which is going to protect you in case there's um some sort of natural disaster. That's required yep um, to insure the home yep case of a potential loss. Don't you call that pita? Well, yes, that would be your principal interest.
Speaker 1:Taxes and insurance that would be your payment and mortgage insurance and mortgage insurance is in the pita right.
Speaker 2:Principal interest taxes, taxes insurance correct if they are putting less than 20 down okay, so, but it'll be part of it. You don't have to do principal interest taxes, insurance and mortgage insurance correct, it's all it's all included in one okay yeah, so it's going to be principal and interest repayment of the loan.
Speaker 1:Okay.
Speaker 2:Home insurance, also known as hazard insurance Taxes, which is going to pay your property?
Speaker 1:tax bill.
Speaker 2:You're so technical Anyways and mortgage insurance.
Speaker 1:Okay, Now when it comes to mortgage insurance, why? Why does it exist? Why do they have to pay it?
Speaker 2:This is the questions I get why am I paying this? I know, yeah. So if you're putting less than 20% down, it is a requirement to have mortgage insurance and you can either pay it on a monthly basis or you can pay a one-time premium based on how much you're putting down and it's one lump sum, okay, and that would eliminate having a monthly.
Speaker 1:But when it comes to mortgage insurance, why do I need it? I mean, why do I care if my mortgage is insured?
Speaker 2:Well.
Speaker 1:Told you. I got some weird questions. This is the ones that they fire at me. I know.
Speaker 2:So it's a protection to the lender if you're putting less than 20% down. If you have 20% down, then the lender would feel like you have enough skin in the game. You have enough equity to not require mortgage insurance.
Speaker 1:So it makes the lender feel a little bit better knowing that their investment's going to be protected because the buyer didn't put down 20%. They only put down 3% or 1% sometimes, or you know we got zero down programs, stuff like that. But it makes it possible for someone without 20% down, without 20, 40, 60, 80 grand, to buy a home. Correct Right, it just helps.
Speaker 2:Right, yeah, and at some point it will come off. It will come off.
Speaker 1:But does it? Okay, so does it. So aren't there some loan packages that the mortgage insurance is not removable unless you refinance?
Speaker 2:Which one is that, usda and FHA USDA and FHA, so no matter what. It's on for the life of the loan, life of the loan, so conventional loan.
Speaker 1:How does that work? It just falls off.
Speaker 2:When you get to 80%, you could reach out to your servicer. You'd have to have an appraisal done. Okay, and then it can be removed, or it will naturally come off at 78% loan to value.
Speaker 1:Now, is that something you monitor? Say someone no, the servicer does Well what if you're? The servicer.
Speaker 2:Well, yeah, so you would, yeah, yep, and so you'll get an amortization schedule that will show you have to be very specific with Barb Miller here. So when you get to that 78% your servicer, it would naturally come off. It is in all your loan documents that date, if you made your payment each day.
Speaker 1:It just falls off.
Speaker 2:It just falls off at 78%.
Speaker 1:Okay, all right, if it's conventional. If it's conventional.
Speaker 2:Mortgage insurance in Minnesota has to be on for at least two years after the time of purchase. After that it can be removed. Wait.
Speaker 1:Okay, so it has to can be removed. Wait, okay, so it has to be on a minimum of two years. What if you refinance in six months?
Speaker 2:Yeah, that's fine.
Speaker 1:So refinance doesn't.
Speaker 2:Yeah, because it's the life of that loan. Okay, all right, the life of that loan.
Speaker 1:Just not any future loans Correct. Okay, all right. So say you have an FHA loan, you put 3.5% down. You own the house for 8 months. Dad kicked the bucket, gave you $400 gazillion. You want to refinance and put some money down. How do you do that?
Speaker 2:Well if he gave you $400 gazillion, you might not have a mortgage, oh my.
Speaker 1:God the technicality, Stop being so literal, Fuck's sake.
Speaker 2:But anyways, if you wanted to pay down your mortgage and refinance and maybe you would be getting a better interest rate. You could reach out.
Speaker 1:And that would come off. The mortgage insurance would come off. Okay, All right.
Speaker 2:Now is that something Because you'd be switching to conventional financing likely if your credit score is there. Now, how?
Speaker 1:much is your average? Say median's like 350 right now On a $350,000 house. You put 3.5% down. How much would your mortgage insurance be a month Ballpark it at like a 7% interest rate.
Speaker 2:Well, interest rate doesn't matter on mortgage insurance, it's only on your loan amount.
Speaker 1:Okay.
Speaker 2:So I don't know, are you talking FHA?
Speaker 1:Yeah, just wing it, just chuck a number. Maybe $150, $175 a month, Okay so $150 to $175 a month, say your interest rates, or the interest rates come down to three or four.
Speaker 2:It's not going to be at three or four for a while you are very technical today. Barb is usually not this technical. Maybe five or six. Wow, maybe five or six.
Speaker 1:Put a cheap microphone in front of her face and she gets all technical. Sorry, cody. Okay, so say it comes down to five. We have mortgage insurance. Interest rates come down to five, you have enough money to well, say it came down and you didn't have enough money to put 20% down again, would you still get your mortgage insurance? Yeah, or would you still have your mortgage?
Speaker 2:insurance. Does that make sense? So you're going to have to have an appraisal done likely, okay, right, and it's going to be determined off your new appraised value. So houses appreciate at 4% to 7% a year.
Speaker 1:I always say 3% to 5%, but anyways, okay. Okay, I'm going to get technical, let's go get technical.
Speaker 2:Okay, let's just we can play this game. You put 3.5% down and it's a year down the road you're at 8.5% increase in value, right? So really then it would be what 11.5%? You'd have to make up the difference Right To get to 80.
Speaker 1:And then you wouldn't have your mortgage insurance anymore, so you could use let's just say it's two years down the road right and we're using your 5%.
Speaker 2:So you put your 3.5% down. It grew 5%. One year, 5%, the next year it's 13.5%. Well, so now you just need really 6.5%.
Speaker 1:Just to get rid of mortgage insurance, so you could use the equity that you've gained.
Speaker 2:Mortgage insurance is cheaper every 5% equity you have. So if you put 5% down you're going to be paying the most in mortgage have.
Speaker 1:So if you put 5% down, you're going to be paying the most in mortgage insurance.
Speaker 2:So if you put 15%, down, it'd be cheaper than and then if you put 10%, it's cheaper than 5%.
Speaker 1:So it's not just a flat fee, no, oh.
Speaker 2:And so then 15%, then it's even cheaper than 5% and 10% down. Okay, so let's just say your appraisal comes in and you have 18% equity. Well, you're only going to really probably have that mortgage insurance for two years because you just got 2% to go right and it's going to be a very small amount, and when I say small amount, depending upon your credit score. If it's 700s, you're looking at maybe $20 a month.
Speaker 1:Okay, so here's a question for you. So if it's that small amount, it's only $20 a month Interest rates are the same, depending upon your score. Stop being technical for a minute, just roll with me here. Okay, so if you only have that small amount in a payment and you go to refinance, interest rates are the same, is it worth it? Because you have to pay all the closing costs. Refinancing isn't free, so it's not worth it. You just leave it Because it's only $20. Yeah, or whatever.
Speaker 2:And if the rates aren't better, and when we're looking at refinancing. So one rule of thumb, people say, is going down at least 1%, I would say-.
Speaker 3:For interest rates yeah, okay.
Speaker 2:I would say that, even looking at it, at even half a percent, and if you're able to get rid of mortgage insurance, you're going to be saving upwards $150, $250.
Speaker 1:And you can figure that out for people Absolutely. If they're like, hey, Barb, I want to see what's going on here, you can be like you know what. After all this stuff's done, you're going to save yourself $200 a month.
Speaker 2:Yep, which? That's a lot of money. That is a lot of money.
Speaker 1:That's a car payment now depending on what kind of car you want. If it's Cody's Jeep, it's definitely not $200 a month.
Speaker 3:That thing's awesome dude. It's my wife's Full disclaimer. It's my wife's, not mine.
Speaker 2:That's a nice husband.
Speaker 1:What did you call it Bougie? It is bougie.
Speaker 3:It is bougie.
Speaker 1:It's super fancy.
Speaker 2:When it comes to that stuff, you could do the cost analysis and figure out if it's worth refinancing or not is versus the savings yep and that's that's what we do exactly and you can, then I can figure out. You know how long it would take to recoup those costs right, based on your savings.
Speaker 1:Yeah, okay, so but with fha and va and usda no, fha and usda you have to refinance to get rid of that mortgage insurance. You have to. Well okay, okay now okay, if you're depending upon how much you're putting down on fha. Some will come off at 11 year mark also there's see, there's all these little loopholes if you're putting the minimum three and a half percent down.
Speaker 2:It's not, it's on life alone.
Speaker 1:okay, all right, so depends upon If you're putting the minimum 3.5% down, it's on the life of the loan. Okay, all right, depends upon how much you're putting on Sure All right. So would you suggest somebody with FHA to refinance after a while or just leave it?
Speaker 2:Well, it depends upon their interest rate and their cost savings and where the value would be. So, we run an estimate of perhaps where the value would potentially be once they got an appraisal. And if you know, it makes sense to get an appraisal done. And sometimes, when we run it through our automated system not all the time, but sometimes we'll get a waiver Wait an appraisal waiver.
Speaker 1:We call that the golden ticket bitches. Yep, that thing is amazing. We love an appraisal waiver. And then if we we call that the golden ticket bitches. Yep, that thing is amazing. We love an appraisal waiver. We absolutely love one of those.
Speaker 2:And then if we get an appraisal waiver, well then you don't need one, yeah then you're good. And if it is showing that you have that 20% equity, well then the mortgage insurance could be removed. So here's the thing with refinancing, though Without the cost of appraisal, we're going to roll.
Speaker 1:They went through the rigmarole of getting pre-approved, going through financing, getting to close, and it was an absolute nightmare. Now, when it comes to refinancing, is it that much more entailed?
Speaker 2:or is it?
Speaker 1:the same amount, I should say, as it is getting pre-approved and buying a house, or is a little bit easier to refinance?
Speaker 2:well, you've been through it right and um. Our transactions aren't, aren't you know? Hurdles ever because they're awesome but, um, yes, some clients will come and say say, um, oh my gosh, I was with this lender and it was horrible and blah blah and I don't know if I want to refine that's yeah, that's what I'm talking about, those, the nightmare scenarios, you know so you've been through it, so you already know.
Speaker 2:Well, I'm gonna need to show 30 days worth of pay stubs. I'm gonna need to show my w-2 for last year, so it's kind of the same. If I need some money to close, then I'm going to have to show a bank statement.
Speaker 1:But it's kind of the same though, right I?
Speaker 2:mean as applying for a mortgage.
Speaker 1:So debt to income ratio has got to be right. Credit score has got to be correct. Yep, okay.
Speaker 2:For conventional FHA or USDA. Refinances VA. If we do a VA, earl Okay.
Speaker 1:What's a VA Earl, who's Earl and what's he got to do with this?
Speaker 2:Well, it's not like the Dixie Chicks song.
Speaker 1:I don't know what that means. That might be before my time.
Speaker 2:You don't know the Dixie Chicks, I know the.
Speaker 1:Dixie Chicks.
Speaker 2:but I don't, Because Earl had to die, earl had to die.
Speaker 3:I don't know how to die.
Speaker 1:Come on, bill, both you fuckers Really.
Speaker 3:I'm the only one of the song, though I'm the only one when it came out, it had to have been a top 20 hit.
Speaker 1:Absolutely. I feel ganged up on right now. You're going to have to. I will Google it. Fuckers, Jesus Christ.
Speaker 2:You know what Wow? Gas Cody Well we can't for copyright reasons.
Speaker 3:Oh see, but Bill, you should know the song.
Speaker 1:If you had better microphones we could probably have it in the background.
Speaker 3:Nobody would be able to hear it Just saying Anyways Going joke of the day.
Speaker 2:What were we talking about, earl B-A-R-L.
Speaker 1:Interest rate reduction loan. Okay, so it's an acronym. That's what it is.
Speaker 2:And so what that is? It's basically your income, okay, because? Yeah, yeah yeah um also, too, there's an fha streamline, so if you're going to stay with fha and and refinance to a lower interest rate, that too we can do a non-credit qualifying, meaning we don't need to have your income and your. I would like to point out.
Speaker 1:Barb is rifling this stuff off at the top of her head. That's how long she's been in this. She just knows all this stuff. There's no internet, there's no sheet in front of her, that's just stuff off the top of her head. This is what decades of experience is right here. Thanks, Bill. I mean seriously. This is why I like working with Barb, Because I'll say hey, Barb, this is our situation, this is what's going on, and she'll go. We're going to do this, this, this and this. If that don't work, we're going to try plan C and figure out something. It's insane, your list. It's fucking insane. It is yeah, it is nuts.
Speaker 3:What it makes me think right away is that there's been a lot of failed opportunities that have created these scenarios. It's like, okay, now, this is how we're going to do it.
Speaker 1:Oh yeah, without question. Yep, I mean, imagine the people that have called other. You're not going to be able to walk out of here and fall down the stairs. Your head's going to be so big.
Speaker 1:Imagine all the people that have failed mortgages or been turned down for pre-approvals because they didn't know what. You know, when I say we have 100% close rate, we have hundreds of transactions 100% close rate. When Barb says it's a go, it's a go. There's no ifs, ands or buts, because she goes through all this stuff, whether it's refinancing, FHA, USDA, VA, conventional, there's 203K loans, there's the was it the homestead, Homestyle, Homestyle loan. That's a conventional refinance loan, Construction loans I mean there's so many different aspects and she just rifled off like fucking seven of them without even thinking about it. She's just like bop, bop, bop, bop, bop, bop, bop. When you're home shopping and home when it comes to lenders, go with somebody who knows what they're doing. Plain and simple right.
Speaker 1:I mean't, there's all these self-proclaimed I am the best at this, I am the best at that.
Speaker 3:This is fucking proven, proven there's no need for self-fired up right now it pisses me off.
Speaker 1:There's no need for self-proclamation when it comes to what we do right. When people are like why do you suggest barb? I'm like fucking call her you'll see, listen to her voice.
Speaker 3:Oh yeah, she's got this voice. It's amazing.
Speaker 1:But I mean and it's happened already, we've had so many people they'll call and say, bill, I'm not ready, because it always starts. Usually it starts with me. They'll call and say, well, this person didn't approve me, we can't sell their house. Stop for a minute. I know this is your mom's, sister's, brother-in-law's, uncle's sister's twice removed cousin, but call bar bar might have a solution. And I'd say at least half the time we're house shopping the next day because she has option a, b, c, d, e and f that she's known about for the past 20. How long you've been doing this for 20?
Speaker 1:years, that's 20 years, 20 years, two decades right, and you have a self-proclaimed I am the best lender. I've been doing this for seven fucking minutes. I'll figure it out. We'll just fumble, fuck our way through it. It'll be great. That's not how it works and that's why I don't use regular, normal, plain jane lenders. I mean, I've had meetings with some. You've heard about them. They shoot themselves in the foot. I mean, I hate the self-proclamation. Well, I'm the best. The best, are you? Are you really? Are you? So? Yeah, okay. So, anyways, proceed to whatever you were talking about, rant over.
Speaker 1:I don't remember now when were we at Bill? Oh, we're at 18 minutes. Can we call this a podcast? Does that work? I think so, that works.
Speaker 2:All right Bill. Let's All right Bill let's wrap this one up. We're going to throw the towel in on this one because Barb's head is so big she can't fit through the door anymore, you know. Thanks for tuning in to.
Speaker 1:Keys and Credit where your knowledge isn't. Something when your knowledge isn't no, where the market isn't inflated. It's your knowledge because you're an idiot.
Speaker 3:The market isn't the only thing inflated.
Speaker 1:Okay right. How does he have this stuff memorized? I don't know, but I better practice. It's like he does this for a living.
Speaker 2:I mean good God, 53 years old and I can't remember nothing. We know, we know.
Speaker 1:Time is a remembrance problem of yours as well. Just saying Punctuality is a big fucking deal, barb.
Speaker 2:I talk to a lot of people. Do you I do a lot of mortgages, do you? I mean, this is kind of quick.
Speaker 1:You've only been doing this for 20 years.
Speaker 2:I know.
Speaker 1:Are you sure? Anyways, anyways, okay.
Speaker 2:Well, I think we're going to wrap that up, bill. Thanks for tuning in to Keys and Credit, where the only thing inflated isn't the market, it's your knowledge. If you found this helpful, share it with a friend or leave us a.