YOUR MONEY
CREDIT, COLLEGE, TAXES AND REAL ESTATE
PRINT
EMAIL
DEL.ICIO.US
DIGG THIS
I have been waiting for the day when I would have 20% equity in my home and would be able to cancel my private mortgage insurance. Now that day has come (I actually have 22% equity). But when I called Chase (my lender), I was told that I needed to get a Broker Price Opinion, which costs $150, before they would do anything. Can they do that? -- Chris Barenz, Blandinsville, Ill.
Call it a Catch-22%. Lenders are generally required to drop private mortgage insurance when your equity in your home reaches 22% of the property's value. If you ask, they'll sometimes do it once your equity reaches 20%.
But in figuring your equity, the lender is obliged to consider only your down payment plus the principal portion of your monthly payments. The lender doesn't have to count price appreciation. Chase, for one, drops PMI automatically only if you reach the 22% equity level through scheduled monthly payments (extra payments don't count) and don't have any missed or late payments.
We asked Chase to look into your case, and the company pointed out that you reached 22% equity by making accelerated payments. In that case, the bank requires borrowers to pay for a Broker Price Opinion, which costs about half as much as a full appraisal. "Generally, this is to confirm that the outstanding loan is no more than 78% to 80% of the home's value, " says Tom Kelly, of Chase. But $150 is probably a small price to pay compared with your PMI premiums.
All aboard for rails
I read that Warren Buffett's Berkshire Hathaway bought almost 11% of the shares of Burlington Northern Santa Fe. Is it too late to invest in the stock? -- Tom Stewart, via e-mail
We remain bullish on all the railroad stocks because the industry is undergoing fundamental change. With retail goods increasingly coming from Asia, supply lines from factory to store shelf are longer. And that plays to rail's strength.
Demand for coal, another rail staple, is increasing, and the low-sulfur variety from Wyoming sometimes travels more than 1,000 miles. High fuel costs and driver shortages mean more truckers put their trailers on trains.
All of these trends give railroads pricing power they've lacked for a century. Railroads are still raising rates in a weak economic environment. A stepped-up economy will give earnings an even bigger boost. Plus, analysts expect railroads to step up their repurchases of shares, which would increase earnings per share.
BNSF (symbol BNI; recent price $91), Norfolk Southern (NSC; $54) and Canadian National (CNI; $48) are generally considered the best-run of the larger North American railroads.
Reprint Article
|
|
|
|
|
