You May Be Able To Discontinue Your PMI
February 28, 2008 – 7:54 am
PMI, or Private Mortgage Insurance, is typically required by lenders when borrowers are not able to put 20% down on the purchase price for their new home. PMI is a type of insurance that protects the lender in the event that a homeowner defaults on the loan.
What Is Your Home’s Equity?
You may no longer be required to pay PMI if the equity in your home is now at least 20% of its value. With homes prices increasing sharply around the country, some homeowners could find that they have already meet the 20% equity threshold, thus removing the need to have PMI.
Get A Certified Appraisal
If you would like to have PMI removed, you will need to contact your mortgage lender and ask what steps you will need to take before it can be dropped. Many lenders will require that you obtain a home appraisal from a certified appraiser before PMI can be discontinued. You may have to absorb the $300- $500 cost for the appraisal, but you could save thousands of dollars in PMI costs if you are able to drop an insurance plan that protects the lender, but doesn’t provide a benefit to you.
Further Reading
Tags: home mortgage, home refinancing, PMI, private mortgage insurance
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