How to Stop Paying PMI on a Home Loan

How to Stop Paying PMI on a Home Loan

Borrowers who are unable to pay 20% of the buy price of their homes are required by law to buy private mortgage insurance policies. These policies will protect lenders from defaulting borrowers. It is permanent, since it stops once you have paid 20% of the buy price.

You can stop paying PMI on a home loan by getting yourself 20% place. You can do this by taking a second mortgage on the character, borrowing from friends and relatives, taking some money from your retirement funds and so forth. This way, you will save yourself a lot more in the future. Those who do not have this privilege will have to pay PMI but have a right to ask for the cancellation of the PMI on their monthly payments as soon as they have 20% equity on their homes. You will know this by calculating the LTV of your home. The home value ratio is the total value of the remaining amount of loan divided by the value of the home. You will have to make an appraisal of the home for this, in case the value of the home has increased over time.

If you do not have the time for keeping up with ratios and calling up your lender, ask him for the amortization schedule, and ensure that you know the date when you will have attained 20% of the value of the home. If you speculate the value of your home has increased, you can schedule an appointment with your lender earlier for a discussion of when the PMI should be dropped. To make it easier for your lender to listen to what you have to say, ensure that you have paid off your debts to him in time every month. When you have been a defaulter for a long time, it will be harder to ask for anything since you will be considered a high risk borrower. Call your lender to schedule an appointment or write a letter and sustain anything you claim with evidence (appraisal, amortization schedule etc)

It does not take your request for the lender to cease charging you the PMI as it is a requirement of law for them to cease charging PMI as soon as you have 20% equity on your home. However, you may have a hard time requesting for your right if you have not been good at making your payments. Sometimes, borrowers will have to pay their PMI for longer because they have been defaulting.

leave your comment