PMI, or private mortgage insurance, allows individuals to purchase their homes with less than a 20% down payment. If you are paying PMI, the question you need to ask yourself is; “Is it time to stop paying monthly PMI into an escrow account and instead start putting that money into your pocket?”
If you purchased your home with conventional financing and put less than 20% down, you’re likely paying PMI. Private mortgage insurance protects the lender or investor against loss if a borrower stops making payments. Often, homeowners pay this year after it’s no longer needed. As a result, they end up paying thousands in insurance premiums. Here’s the good news that many homeowners don’t realize – Once you’ve reached 20% equity in your home by appreciation, improvements made to the home, paying down the principal balance of the mortgage, or any combination of the three, you can have the lender to cancel the private mortgage insurance.
To begin the process of removing a PMI, request in writing that the private mortgage insurance be canceled and provide the lender with proof of sufficient equity over 20%.
In most cases, the necessary proof is a state-certified appraisal.
Recent legislation requires servicing lenders to make homeowners aware of any PMI they might be paying for and the requirements necessary to have it canceled.
homeowners must remain in contact with the lending institution that services their mortgage to inquire about this type of insurance and the requirements necessary to have it cancelled. After a homeowner has built up 20% equity for a single-family owner-occupied residence in the home, they may begin to initiate steps towards canceling the mortgage insurance. Every loan servicing institution can have different policies regarding this procedure. Ask your servicing lender to provide in writing their specific requirements to cancel PMI insurance.
Keep in mind it’s the servicer’s ultimate decision and they’ll consider many factors including the borrower’s payment history over the life of the loan before allowing you to drop this insurance. It’s in your best interest to keep the provisions surrounding its cancellation in mind because no one is going to cancel it for you.
Most lenders require a real estate appraisal by a state-certified appraiser as the primary proof required to eliminate unnecessary PMI insurance. At Native Appraisal we specialize in helping people just like you rid themselves of unneeded and unwanted PMI insurance.
We take pride in providing exceptional customer service and ensuring that every client receives the best possible appraisal services. Our team of certified appraisers uses the latest technology and market analysis to provide accurate valuations that you can trust. Contact us today to learn more about our services and how we can help you with your real estate appraisal needs.