by Guest » Thu Nov 22, 2007 05:22 pm
When you buy a home with a mortgage valued at more than 80% of your home's worth, your lender would need you to have a Private Mortgage Insurance. A PMI policy covers a lender from any loss if you default as a borrower. Not just that, it also enables you or a prospective borrower to own a home even if you have insufficient cash. You can purchase a home with 3% - 5% down payment if you opt for PMI.
Do you have to buy PMI?
No. There are 2 main ways by which you can avoid PMI. Take a look at the following ways by which you can avoid paying for PMI:
- Paying higher interest rate on your mortgage loan may lead your lender to waiving off your PMI requirement. How much you pay as interest depends on the down payment that you make.
- The second option is to opt for an "80-10-10" loan. This means that there will be 2 loans and a 10% down payment. 90% of the loan amount is financed by PMI rate that is equivalent to 80% of the sale price. The final 10% of the sale price is funded by a second mortgage.
How long do you have to pay PMI?
You may continue to pay PMI till as long as your home has sufficiently appreciated in value and the mortgage amount comes to less than 80% of the value of your home. Once your mortgage value reaches less than 80% you may request your lender to drop the PMI requirement.
You may check the appraised value of your home. If the loan balance comes at 78% of the original purchase price, your PMI will be automatically dropped.
You may eliminate your PMI in as less as 2 years. You may consult your realtor to determine what would be the range for homes that have similar appreciation as yours that have been sold or closed in the last 6 months. Having done this you can pay for a bank appraisal. Remember when you buy a policy make sure you are clear about the PMI elimination option.
You may check the appraised value of your home. If the loan balance comes at 78% of the original purchase price, your PMI will be automatically dropped.
You may eliminate your PMI in as less as 2 years. You may consult your realtor to determine what would be the range for homes that have similar appreciation as yours that have been sold or closed in the last 6 months. Having done this you can pay for a bank appraisal. Remember when you buy a policy make sure you are clear about the PMI elimination option.
Related Readings
- About PMI
- Can the PMI provider sue home owner?
- PMI after death of the insured
- Recovering PMI paid ahead
- New legislation and PMI
- PMI refund
- PMI during foreclosure
- How does PMI protect?
- Can you cancel PMI in 2 years?
- What are your rights with PMI?
- When can you cancel private mortgage insurance?
Hello,
I had taken a loan about 2 years ago and have been repaying my installments regularly. As far as I remember I am also paying the premiums for the Private Mortgage Insurance (PMI). But how long do you have to pay pmi once your loan balance gets reduced after paying 24 installments? Does anyone have any idea? Thanks
I had taken a loan about 2 years ago and have been repaying my installments regularly. As far as I remember I am also paying the premiums for the Private Mortgage Insurance (PMI). But how long do you have to pay pmi once your loan balance gets reduced after paying 24 installments? Does anyone have any idea? Thanks
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