Does your monthly mortgage payment include a PMI charge? Private mortgage insurance (PMI) protects the lender in the event that you default on your mortgage payments and your house isn’t worth enough to entirely repay the lender through a foreclosure sale. Unfortunately, you foot the bill for the premiums, and lenders almost always require PMI for loans where the down payment is less than 20%. They add the cost to your mortgage payment each month, in an amount based on how much you’ve borrowed. The good news is that PMI can usually be canceled after your home’s value has risen enough to give you 20% to 25% equity in your house. By law, mortgage lenders are required to allow you to remove PMI once you reach the required equity. In other words, the principal balance of your loan needs to be at or below 80% of the original loan amount.
Also, if the appraised value of your home is 20% or more of your balance then you qualify for having your PMI removed or deleted from your monthly mortgage payment.You can start trying to get your PMI canceled as soon as you suspect that your equity in your home or your home’s value has gone up, perhaps because your home’s value has risen along with other local homes or because you’ve remodeled. Such value-based rises in equity are harder to prove to your lender, and some lenders require you to wait a minimum time (around two years) before they will approve cancellation of PMI on this basis.
Robinson Appraisal group has performed an abundance of appraisals to eliminate private mortgage insurance for residents of Harford County, Baltimore County, Baltimore City, Cecil County, Howard County and Anne Arundel County. Our appraisers are experienced in working with numerous banks in an effort to elimiante PMI for homeowners.
Since home values have been rebounding, it may be a good idea to contact your lender and see if you are indeed paying PMI. If so, it may be time to evaluate what your home is currently worth as compared to what you currently owe. After all the additional cost of PMI to a $200,000 mortgage can be from $60 to $120 per month.
First, contact your lender and verify that you are paying a mortgage insurance premium. You’ll also need to get the exact outstanding balance on your mortgage loan. If you feel that your home’s value has gone up enough to reach the 80% mark, then you’ll need to talk to your lender about the steps involved in having an appraisal performed for PMI removal. Be sure to ask if you can hire your own appraiser or if you must go through an appraiser selected by the bank. If you can use your own, then give us a call! Our appraisers would be delighted to help you finally eliminate your monthly PMI!