The majority of homeowners when purchasing a house will hear the term “PMI”. “PMI” is private mortgage insurance. Homeowners purchasing a house with less than 20 percent down will most likely have to buy private mortgage insurance — PMI. The purpose of this insurance is to cover the lender in case you default, and it generally adds between $50 to $100 to your monthly payments. you may have to accept this PMI payment in the beginning, but is there a way to get rid of it over time?
To answer it simply, yes! There will come a point where you have enough equity in the home that the bank does not need to charge this anymore. The Homeowners Protection Act gives you the right to request that your lender cancel PMI when you have reached the date when the principal balance of your mortgage is scheduled to fall to 80 percent of the original value of your home. In order to do this you must:
- Your request must be in writing.
- You must have a good payment history and be current on your payments.
- Your lender may require you to certify that there are no junior liens (such as a second mortgage) on your home.
- Your lender can also require you to provide evidence (for example, an appraisal) that the value of your property hasn’t declined below the value of the home when you first bought it. If the value of your home has decreased, you may not be able to cancel your PMI.*
It may take awhile, but that pesky PMI won’t be around forever! Still have questions about PMI or other home related items? Don’t hesitate to contact the GreatFloridaHomes team!
*instructions from the Consumer Financial Protection Bureau http://www.consumerfinance.gov/
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