If you purchased your home with conventional financing and put less than 20% down, it’s likely you’re paying PMI. Private mortgage insurance protects the lender or investor against loss if a borrower stops making payments. Often, homeowners mistakenly pay PMI years after it is no longer needed and as a result end up paying thousands in useless insurance premiums.
Every month, if you’re like most of us, you dutifully make your mortgage payment. Have you ever given any thought to exactly what makes up your monthly payment? For most of us, the mortgage payment not only pays off the mortgage loan, but a portion also gets put into an escrow account to pay for real estate taxes and a variety of different types of insurance (homeowners, hazard, flood, PMI, etc).
There is a silver lining! – Once you’ve reached 20% equity in your home by appreciation, improvements made to the home or by paying down the principal balance of the mortgage (or any combination of the three), you can force the lender to cancel the private mortgage insurance. All you have to do is request in writing that the private mortgage insurance be canceled (most lenders have a brief form which must be filled out) and provide the lender with proof of sufficient equity over 20%.
In most cases, the necessary proof is a state certified appraisal. Recent legislation (the Homeowners Protection Act) requires servicing lenders to make homeowners aware of the existence of any PMI they might be paying, and the requirements necessary to have it cancelled. Fortunately, you don’t have to wait for the lender’s notification to rid yourself of PMI.
At Turner’s Appraisals I specialize in helping people just like you rid themselves of unneeded and unwanted PMI insurance.
I offer a free initial consultation that will help you to determine if you have sufficient equity in your home to enable you to cancel your PMI.