GET RID OF PMI NOW IF YOU CAN

It may seem obvious to many people that paying for a service you no longer need is a bad idea but a lot of people do when it comes to Private Mortgage Insurance (PMI).

Private mortgage insurance is a policy that borrowers pay because their equity is less than 20% of the value of their home at the time when they buy or refinance. This policy is required by conventional mortgage lenders not by subprime sources. It only covers the amount over 80% of the appraised value: for instance if the borrower purchased a property for $100,000 with a $5,000 down payment, the policy will cover $15,000. If the borrower defaults, the lender will receive $15,000 from the mortgage insurance company and the house.

Assuming that the borrower pays as agreed, the mortgage balance may fall below 80% of the appraised value canceling the need for PMI. In order to bring the lender to stop collecting the fee, the home owner must prove to the lender that the mortgage balance has fallen below the 80% mark. The means for this is to get a new appraisal. Usually, people will refinance but that is not necessary and the cost of a refinance is less than that of an appraisal.

If you are paying for PMI and feel that is should be canceled, order an appraisal because it may save you money in the long run.
PMI is a liability and getting rid of liabilities increases your assets or wealth.
You should not be paying for a service you do not need and PMI may just be one of them.
Contact John Palla at info@p2funding.com for more information regarding PMI and other mortgage related issues. If you mention this blog, you will get a complete free mortgage analysis.