PMI Removal: What You Need to Know to Reduce Your Mortgage Payments

PMI (Private Mortgage Insurance) is insurance that protects lenders against loss in the event that a borrower defaults on a home loan. This allows borrowers to purchase a home with much less of a down payment, because without PMI most lenders would require at least a 20% down payment.

The problem with PMI arises when a homeowners equity reaches 20% either by paying down the loan, improvements made to the home, increase in home value or any combination of the three. The Homeowners Insurance Protection Act provides for removal of PMI when 20% equity is reached but most homeowners continue to pay unaware that it is no longer required.

To have your PMI cancelled contact your lender to request information on their specific requirements. The most common requirements are:

  • A minimum period of time has passed, usually between six months and two years
  • The loan is current with no history of late payments
  • A new independant appraisal performed by a state certified appraiser

    If your lender requires an appraisal Real Estate Valuation Consultants, Inc. would be happy to help you lower your monthly mortgage payment. Click here to order an appraisal today.