Can I remove Private Mortgage Insurance (PMI)?

If you secured a home loan with less than a 20% down payment, chances are your lender required mortgage insurance to cover the exposure in case you default. Once your equity position in the home reaches 20%, you will want to stop paying mortgage insurance (unless you have a FHA-insured loan, requiring premium payments for the life of the loan).

Most homebuyers ask that mortgage insurance be canceled once they pay their loan balance down to 80% of the home’s original appraised value. When the balances drop to 78%, their mortgage servicer is required to cancel mortgage insurance for them. Mortgage servicers also must give borrowers an annual statement that shows who to call for information about canceling mortgage insurance.

The law does allow lenders to require mortgage insurance of a high-risk borrower until the balance shrinks to 50% of the home’s value. You may fall into this high-risk category if you have missed mortgage payments, so make sure your payments are up to date before asking your lender to drop mortgage insurance. Lenders may require a higher equity percentage if the property has been converted to rental use.

For complete mortgage loan program details and to find out if you qualify, contact us today at 888-488-3807 or go to www.OneTrustHomeLoans.com.

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