Many of my clients want to know how they might get rid of PMI. In order to get rid of the PMI (Private Mortgage Insurance) there are a few thing you need to know.
PMI, is generally required by the lender or the investor when the borrower does not have a 20% down payment. More precisely, mortgage insurance is required when the loan-to-value exceeds 80% of the sales price. The borrower has the right to cancel their mortgage insurance when certain requirements are met. This can happen automatically or by requesting the lender to cancel.
The borrower's PMI will be automatically cancelled by the lender when both of the following conditions are met: 1) the mortgage balance is 78% of the home's original value and 2) all payments had been current on the loan.
The borrower can send the lender a written request to cancel the PMI when all of the following conditions are met: 1) the mortgage balance is 80% of the original value of the property 2) the mortgage payments were paid in a timely manner 3) no other loans have been taken out on the home and 4) the property value of the home has not declined.