profile picture

English Spanish

PMI Private Mortgage Insurance - How to remove it from your mortgage

Buyers with down payments of less than 10% are required to get mortgage insurance. These loans are risky 
as evidenced with the "sub-prime" mortgage crisis.

The amount of the insurance is often $40 to $50 per month for a $100,000 home.  This payment is typically added to the overall payment

Homeowners continue to pay the PMI even after their loan balance has dropped below the original 80 percent threshold, which occurs as the equity in the home increases.

Previously, lenders were under no obligation to inform borrowers when they had reached a point where the PMI could be removed. In 1999, when the Homeowners Protection Act took effect and this law now obligates lenders to terminate the PMI when the principal balance of the loan reaches 78 percent of the original loan amount. 

The law stipulates that, upon request of the homeowner, the PMI must be dropped when the principal amount reaches only 80 percent!  This law only applies to home loans - whether first time or refinances - that closed after July, 1999. Also certain other conditions must be met, such as being current on the loan payments. Buyers that purchased before July 1999 can also have their PMI removed.

The question is when does the equity exceed the 20 percent point? A state certified appraiser can provide an accurate appraisal to determine this.  

Cancellation of Private Mortgage Insurance: Federal Law May Save You Hundreds of Dollars Each Year

Private Mortgage Insurance (PMI): Law Requires Lenders to Cancel PMI

Got a Question?

Do you have a question relating to real estate appraisals? We can help. Simply fill out the form below and we'll contact you with the answer, with no obligation to you. We guarantee your privacy.

Information
Question
NASA PHOTO OF THE DAY:
 
Hubble’s Galaxies With Knots, Bursts
9/22/2018 4:23 PM
In the northern constellation of Coma Berenices lies the impressive Coma Cluster — a structure of over a thousand galaxies bound together by gravity...Read More
 
Small Satellite Demonstrates Possible Solution for 'Space Junk'
9/22/2018 4:23 PM
The International Space Station deployed this small satellite for the NanoRacks-Remove Debris investigation, designed to demonstrate an approach to reduce the risks presented by orbital debris or "space junk....Read More
 
First Light Data for NASA's Parker Solar Probe
9/22/2018 4:23 PM
Just over a month into its mission, NASA's Parker Solar Probe has returned first-light data from each of its four instrument suites. These early observations show that each of the instruments is working well...Read More
 
Astronaut Serena Auñón-Chancellor Examines Her Eyes
9/22/2018 4:23 PM
Astronaut Serena Auñón-Chancellor examines her eye with a Funduscope...Read More
 
ICESat-2 Lifts Off to Study Earth's Changing Ice
9/22/2018 4:23 PM
A Delta II rocket launches with NASA's ICESat-2 onboard, Saturday, Sept. 15, 2018, from Vandenberg Air Force Base in California...Read More
 
Juno Captures Elusive 'Brown Barge'
9/22/2018 4:23 PM
A long, brown oval known as a "brown barge" in Jupiter's South Equatorial Belt is captured in this color-enhanced image from NASA's Juno spacecraft...Read More
 
Success! Final Orion Parachute Tests Completed
9/22/2018 4:23 PM
NASA completed the final test to qualify Orion’s parachute system for flights with astronauts, an important milestone on the path to send humans on missions to deep space...Read More
 
Staring Down Hurricane Florence
9/22/2018 4:23 PM
Ever stared down the gaping eye of a category 4 hurricane? It's chilling, even from space...Read More
 
Hurricane Florence Viewed from the Space Station
9/22/2018 4:23 PM
Astronaut Ricky Arnold, from aboard the International Space Station, shared this image of Hurricane Florence on Sept. 10, taken as the orbiting laboratory flew over the massive storm...Read More
 
Bright Spots On Ceres
9/22/2018 4:23 PM
Bright surface features on the dwarf planet Ceres known as faculae were first discovered by NASA's Dawn spacecraft in 2015...Read More