Removing Private Mortgage Insurance – PMI
Some Loans Require Private Mortgage Insurance. Want to know how to Get Rid of it?
Private mortgage insurance in required if you put less than 20% down on your home purchase. After your loan closes you make a monthly mortgage payment that includes a sum of money towards you Private Mortgage Insurance. This insurance cover any loses should you walk away from your home or not be able to make your payment and the property goes into foreclosure. So the question is.. how do you remove it after you get this form of insurance.
Your lender may cancel your PMI (private mortgage insurance) if you meet the following standards:
1. Pay down your mortgage below 20% of the current value of your home.
2. Let the equity in your home grow to a point where it grows over 20% of its beginning loan amount.
Basically, you need to have 20% increase in avaialabe equity in your home to petition to remove this insurance.
So, when you are getting ready to purchase a home, consider how much money you have to put down as a percentage of the total purchase price. If you can afford to put down 20% or more, you can get rid of the PMI. Another strategy is to take on a 1st and 2nd trust deed and avoid the PMI payment. People commonly do a loan combination like a 80%/10%10% loan combination or even a 80%/15%/5% loan combination where the lender or home seller accept the subordinate lien. The point is that you have options. Consult a LendPlus Financial loan agent to work out a plan that can help you avoid PMI.