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Paying Private Mortgage Insurace (PMI) Now!

What is Private Mortgage Insurance (PMI)?

PMI is an insurance policy taken out by a mortgage company to protect the lender in case of a foreclosure. However, it has nothing to do with protecting you, the borrower. When you took out the loan to purchase your house, the lender added the cost of this insurance to your monthly payment unless you made at least a 20% down payment. Once you pay off enough of the loan to meet this 20% threshold, you are eligible in almost all cases to have this payment dropped if an appraisal shows that your loan is really 80% or less of your current home value. Since most homes are currently increasing in value, this condition is frequently met before 20% of the loan is paid off.

Why don't I want PMI?

The answer to this is very simple: PMI has absolutely no benefits for the homeowner (borrower) after you achieve 20% equity in your home. Dropping your PMI payments will save you lots of money.

How much does PMI cost?

Typical amounts range from $40.00 - $100.00 a month, which adds up to $480 - $1200 a year. However, the actual rate is based on various factors including the size of the loan, the amount of the down payment, and your individual lending institution. The only way to find out the exact amount is to contact your lender directly.

How do I drop my PMI?

• First, contact your lender directly to ensure that you are actually paying for PMI.
• Second, contact us and order an appraisal of your property. The only way to get PMI payments stopped is to have an appraisal that shows that your loan's balance is 80% of the current market value of your home. The only way to determine current market value is to have an appraisal performed.
• Third, present your lender with a copy of the appraisal and request to have your PMI payments stopped.
• Finally, enjoy the extra money that you will have.

What does the appraisal involve?

An appraisal involves an inspection of your property and then finding similar properties in the neighborhood that have sold recently. From this, the fair market value of your property can be determined. The only thing that you have to do is order the appraisal and make an appointment for the home inspection (the inspection typically takes only about 30 minutes, but varies depending on the size of the house, room count, etc.).

What is the law relating to PMI?

Congress passed a comprehensive law in 1998 (Public Law 105-216) which deals with PMI, making it required for you to have these payments dropped if the conditions are met. You can read the full text of this law here if you wish.

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Paying Private Mortgage Insurace (PMI) Now!

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