PMI Removal Appraisals
Private mortgage insurance, or PMI, is supplemental insurance that many lenders require homeowners to purchase when they buy a house and pay less than a 20% down payment. Private mortgage insurance protects the lender or investor against loss if a borrower stops making payments. Quite often, this additional payment is incorporated into the monthly mortgage payment and is quickly forgotten. Fortunately, you may be able to stop paying monthly PMI and instead start putting that money in your pocket.
In many instances homeowners mistakenly pay this insurance years after it’s no longer needed, and as a result end up losing thousands of dollars in useless insurance premiums. Many homeowners don’t realize once they’ve reached 20% equity in their home either by appreciations, improvements made to the home, or by paying down the principal balance of the mortgage (or any combination of the three), they can have the lender cancel the private mortgage insurance. In most cases, all the homeowner has to do is request in writing that the PMI be canceled, fill out a brief form, and provide the lender with proof that they have reached 20% equity or more in their home. In most cases, the necessary proof is a state certified appraisal.
PMI has been a large money-maker for the mortgage lenders. It has become increasingly common to see home buyers using down payments of 10, 5, or even 0 percent, allowing over 15 million American to be able to purchase homes over the past four decades according to the Mortgage Insurance Corporation of America (MICA). Needless to say loaning this much presents the lenders with a lot more risk. Until recently lenders were under no obligation to tell homeowners when they had reached a point where the PMI can be dropped. This all changed when the Homeowners Protection Act took effect in 1999. It requires lenders to notify you when your PMI can be removed and how to cancel it. Fortunately you don’t have to wait for the lender’s notification. In most cases if you have equity of 20% or more you’ll be able to cancel it almost immediately.
PMI does not protect a homeowner against loss, so a borrower that’s required to purchase it will probably never deal with the mortgage insurance company itself. All dealings concerning mortgage insurance are usually handled by the lender. Therefore you must stay in contact with the lending institution which collects your monthly mortgage payments to inquire about this type of insurance and requirements necessary to have it cancelled. In most cases it can be cancelled after a homeowner has built up 20% equity for a single family residence, although there are a few banks that require as much as 25% equity. Check your loan documents to determine what percentage of equity your bank requires to cancel PMI.
The first step in removing PMI is to contact the lending institution where you send your mortgage payments. This may or may not be the lender whom you had the loan with originally. Your lender will be able to then help you with the cancellation procedure and tell you exactly how much your remaining mortgage balance is. Every lending institution has different policies regarding this procedure and keep in mind it is the lender’s ultimate decision whether or not to cancel the PMI. They will not only take into account how much equity is in your house, but also your payment history. Any missed or delayed payments could alter their decision.
Most lenders require a real estate appraisal by a state certified appraiser as the primary proof required to eliminate unnecessary PMI. Appraisals For Land And Home specializes in helping customers in Blue Ridge, Georgia and surrounding areas find the value of their homes and remove PMI payments. We offer a free initial consultation and will help you determine if you have sufficient equity in your home to cancel your PMI, decreasing your mortgage payment and thus putting more money in your pocket.