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Private Mortgage Insurance

Are you paying private mortgage insurance?

Private mortgage insurance, or PMI, is usually required when homebuyers have a downpayment less than 20% of the sales price or appraised value of a property. This is money you don't have to pay once your principal balance of the mortgage reaches 80% of the original value of the property.
If you have paid extra toward your principal you might be eligible to terminate the mortgage insurance.

Lenders are legally required to automatically terminate mortgage insurance when the principal balance of the loan reaches 78% of the original value of the property. However, lenders sometimes inadvertently collect money after the termination date, so it's important for homeowners stay aware of their payment progress even if they aren't trying to speed up the process.
As noted, in addition to reaching the 80% loan-to-value (LTV) threshold, the borrower must meet certain other requirements for borrower-requested cancellation: 
• The borrower must have a good payment history
• The borrower must be current on the loa
• The borrower must satisfy any requirement of the holder of the mortgage for certification that the borrower’s equity in the property is not subject to a subordinate lien
• The borrower must satisfy any requirement of the holder of the mortgage for evidence (of a type established in advance and made known to the borrower by the servicer) that the value of the property has not declined below the original value.  
The bank might also request proof in the form of an appraisal. A bank appraisal will typically cost $400-450.

Getting down to 80 or 78 percent
To calculate whether your loan balance has fallen to 80 or 78 percent of original value, divide the current loan balance (the amount you still owe) by the original appraised value (most likely, that's the same as the purchase price but not always so check your appraisal).

Formula: Current loan balance / Original appraised value

Example: current principal balance owed $171,600 on a house that cost $220,000 several years ago.
$171,600 / $220,000 = 0.78.

That equals 78 percent, so it's time for the mortgage insurance to be canceled.



If you have any questions or if you would like assistance in buying, selling or renting give me a call. I'm happy to help.



Ali Palacios, ABR, MCNE, TAHS
Realtor
Today's Home Realty
ali.palacios@todayshomerealty.com
Mobile - 832-418-0670
Fax - 832-201-7492
www.todayshomerealty.com
www.ilovehappyclients.com

9119 Hwy 6 S #230-116, Missouri City, TX 77459


Home buyers and sellers beware: http://homes-sale-richmond-texas.blogspot.com/2016/02/home-buyers-and-seller-beware-wire.html
Rental fraud alert: http://homes-sale-richmond-texas.blogspot.com/2016/02/rental-fraud-alert-texas-luz-astacio.html



About me: http://www.ilovehappyclients.com
Professional Memberships:

  • Houston Association of Realtors®
  • Texas Association of Realtors®
  • National Association of Realtors®
  • Accredited Buyer’s Representative – ABR
  • Master Certified Negotiation Expert – MCNE
  • Accredited Staging Professional – ASP®
  • Texas Affordable Housing Specialist – TAHS
  • Women’s Council of Realtors®
  • National Association of Gay & Lesbian Real Estate


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