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How Can You Stop Paying Your PMI?

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Services for Real Estate Pros with YourSiteNeedsMe.com

If you’re a homebuyer who has less than 20 percent to put down on a house, your lender will most likely require you to pay for private mortgage insurance, or PMI. (An exception: the VA loan, which doesn’t allow lenders to force you to buy PMI.) That’s true whether you’re looking at Port Royal condos or you want to buy a house in El Pescador.

If you’re not sure about PMI and how it’s going to affect you, talk to your Port Aransas Realtor® or your lender.

When Can You Stop Paying PMI?

To stop paying your private mortgage insurance premiums, you’ll have to reach at least 20 percent equity in your home (that’s what you’d have if you had a 20 percent down payment on the home).

There are a few other ways you can stop paying your PMI premiums sooner, though, including:

  •          Refinance your home. If your home value increases, a new lender is less likely to require mortgage insurance.
  •          Have the home appraised again. Sometimes a lender will consider a new appraisal rather than going by the original sales price (or the original appraised value) when they’re determining whether you have 20 percent equity in your home.
  •          Remodel your home. If you add a room or pool that improves the home’s market value, you can ask your lender to recalculate your loan-to-value ratio.

What Do You Need to Do to Cancel PMI?

In order to cancel your PMI, you must request cancellation in writing. You also have to be current on your payments and have a solid payment history.

Some lenders require you to prove that you don’t have any other liens on the home, such as a home equity loan or a home equity line of credit.

You may also need to get a new appraisal to show the lender that your loan balance is below 80 percent of the home’s value.

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