|What is mortgage insurance (also known as PMI)?
PMI is an insurance premium that is taken out by a mortgage company that protects THE LENDER in the event of foreclosure. This insurance does not protect you as a borrower. Unless you made at least a 20% down payment, your lender added mortgage insurance to your monthly payment. This payment is based on the original mortgage amount and is paid as part of your monthly payment. To remove PMI, you must have an appraisal that shows that your home has increased in value or you have paid down your mortgage to the point that your loan is 80% of current home value.
What is equity?
Equity is the difference between the value of your home and the mortgage balance (i.e., if your home is worth $100,000 and your mortgage balance is $80,000, then your equity is $20,000).
How do I drop my mortgage insurance?
- The first step is to contact a local appraiser. The only way to drop your PMI is to have an appraisal that shows that your loan balance is 80% of your home’s current market value. The only way to find out if your home will appraise to that amount is to contact a local appraiser. It’s that simple!
- The second step is to contact your lender and request that your PMI be dropped.
- The third step is to enjoy having a lower mortgage payment.
Who can do the appraisal?
You must have a state certified or licensed appraisal do the appraisal – no other professional can provide this information. Some lenders will require that an appraiser on their approved list complete the appraisal report.
What is the cost of an appraisal?
Appraisal costs can vary depending upon location, gross living area, lot size, and degree of difficulty. Also, some lenders will accept different types of appraisals which will have an effect on the cost of the appraisal. Please see our Residential Fee List.
How much is my mortgage insurance?
The only way to find out is to call your lender’s customer service representative. However, typically the cost per year is $0.38-$0.78 per $100 of your loan amount. See following examples:
MONTHLY PMI COSTS
Sample Rates - Per Month
|Original Loan Amount
When will the mortgage company reduce my payments?
Typically, it takes only a few weeks for your lender to drop your mortgage insurance and for you to start saving money!
Is my lender required by law to drop my PMI?
Yes! Visit CLICK HERE for more information.