by lakemen » Sat Jul 08, 2006 10:36 am
The Private Mortgage Insurance remains indispensable till the homeowner acquires enough equity on the property. The private Mortgage Insurance plays an important role in the mortgage industry. It protects the lender's interest, when the mortgage defaults.
The Private Mortgage Insurance allows the homeowner to qualify for a mortgage with as low as 3%-5% of down payment. Hence, in a way it's helping you to obtain a property faster.
The cost of PMI varies widely with the value of the property, area/locality and the amount of the down payment.
When can you drop the coverage?
Technically, you should have the choice to drop the policy anytime you want. But the lender will not let you do so, until you accumulate 80% equity in the house. Hence, you can actually drop the coverage once your loan is paid down to 80% of the total loan amount.
However, the recent amendment in the Homeowners Protection Act ensures that the PMI will get terminated automatically once the homeowner acquire 22% equity based on the original price of the house. But you have to remain current with your mortgage payments. Also the law excludes properties qualify for FHA and VA loans and the properties with lender paid PMIs.
Regards,
Juanita
The Private Mortgage Insurance allows the homeowner to qualify for a mortgage with as low as 3%-5% of down payment. Hence, in a way it's helping you to obtain a property faster.
The cost of PMI varies widely with the value of the property, area/locality and the amount of the down payment.
When can you drop the coverage?
Technically, you should have the choice to drop the policy anytime you want. But the lender will not let you do so, until you accumulate 80% equity in the house. Hence, you can actually drop the coverage once your loan is paid down to 80% of the total loan amount.
However, the recent amendment in the Homeowners Protection Act ensures that the PMI will get terminated automatically once the homeowner acquire 22% equity based on the original price of the house. But you have to remain current with your mortgage payments. Also the law excludes properties qualify for FHA and VA loans and the properties with lender paid PMIs.
Regards,
Juanita
Posted: Wed Jul 09, 2008 07:41 am Post Subject:
In addition to the above scenario, there are few additional situations that may prevent you from dropping the PMI early enough.
Tx,
JeremyH
Posted: Wed Jul 09, 2008 09:46 am Post Subject:
How to determine the time to cancel the private mortgage insurance?
Posted: Wed Jul 09, 2008 10:02 am Post Subject:
Hey PAhomeowner, if you have obtained 20% equity on your home, you can cancel the private mortgage insurance.
Now, you can ask how to determine whether you have achieved the target or not?
Well, if you have already paid 20% of the mortgage loan, you have attained the eligibility level.
Another way to determine it is by dividing the mortgage amount that you owe by the value of the property and multiply the value with 100. This too will also give you a fair idea on how much equity you have acquired on your home.
Hope the input helps.
BTW good information Juanita and Jeremy :)
Posted: Fri Jul 25, 2008 01:01 pm Post Subject: Insurance
This was a good suggestion that you put up here...dude…..hope that it benefits all the ones who land up here.
insurancecompanycentral.com
Posted: Tue Mar 30, 2010 06:56 pm Post Subject: PMI
SO say you get a good deal on a home
Maybe pay 100,000 for a home worth 150,000
Putting 10,000 down paying the pmi to start borrowing 90,000
When does that equity kick in or do you pay the pmi until you pay off 20% of the loan amount?
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