New York - Private mortgage insurance (PMI) provides insurance to the lender when a borrower does not pay off a mortgage. It is typically required when a borrower puts up less than 20 percent of a home's purchase price. In general, PMI can be cancelled as follows:
-
Your loan agreement allows it - Review your loan agreement. Depending on state law, PMI may not be cancelable per your contract. You should contact your bank for a copy of your signed agreements if you did not retain one.
-
When you have 20% equity - Make sure you know the current value of your house. If property prices in your neighborhood have risen, it may be possible to quickly reach the 20% equity level regardless of how much you originally put down. If so, contact your bank to determine an acceptable appraisal. Normally, you will have to pay the costs of the appraisal.
If you have changed your house to an investment property (rental income), be careful. The bank may consider your house an investment property and not a home. The standard for eliminating PMI on investment property is generally higher than on primary residences. Investment properties generally require PMI if equity stakes are lower than 35%.
________________
About Us
Founded in 1998, The Independent Adviser Corporation has assisted thousands of individuals, families, and businesses. We are 100% independent and objective and offer free private consultations to our clients. Our company publishes free investment research and educational materials, and when specific financial or legal advice is needed, we connect clients with a network of FEE-ONLY professionals. For more information, become a member or to schedule a free consultation, please visit our website at TheAdviser.com or 1800ADVISER.COM.