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 How To Avoid PMI On Your Loan
Lenders holding any mortgage that was secured after July 1999 are required by Federal law to get rid of PMI payments once the equity in the home owner has paid the loan balance under 78% of the homes purchase price, not when 22% equity in the property has been reached from rising property values.("certain high risk" loans are excluded) As a consumer you do have the right to stop paying PMI (for loans made after july 1999) once your equity is at 20% regardless of what you paid for the home.
Keep a record for your principal payments or additional payments you have made. Also try to stay current on the prices of homes that recently sold in your neighborhood. If you have had your loan for less then five years you probably have not paid much principal down. Property values on the other hand could have risen by a large amount and they may have jumped enough to give you the 20% equity that you need and help you eliminate PMI insurance payments!
Once you think you have hit the 20% equity mark you can start the process of canceling your PMI payments once and for all. The first thing you need to do is contact your mortgage lender that you have reached the required equity level and that you want no private mortgage insurance on your loan.
Before they begin PMI removal they will make you provide proof of the increased value that show the 20% equity level has been met. You can use a state certified appraisal for to show the increased value. There are many appraisers in the phone book or your mortgage company can recommend one for you.
Refinance To Get a Lower Rate and Avoid PMI
Another great way that home owners use for avoiding PMI is a refinance. If interest rates have dropped since you received your loan you many want to refinance into a mortgage with a lower rate and no private mortgage insurance, if you have enough equity you might even be bale to pull some cash out for repairs, debt consolidation or any variety of reasons.
If you have any questions on how to eliminate PMI insurance from your loan or would like a quote on the current mortgage rates please feel free to contact our staff of friendly mortgage professionals.
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