HOW TO ELIMINATE PMI (PRIVATE MORTGAGE INSURANCE)

If you are one of the thousands of homeowners that purchased your home with less than 20% down, then chances are you are paying a mortgage insurance premium each month referred to as PMI (Private Mortgage Insurance). Needless to say, the premium for PMI can range from several hundred to several thousands of dollars each year.

But don't despair PMI can be eliminated! How? If you have made advanced payments toward your principal over the life of the mortgage or if the value of your property has increased since you purchased it.

ONE OF THE FIRST STEPS IN ELIMINATING PMI IS AN APPRAISAL


Although the PMI removal policies of mortgage bankers and investors varies widely, PMI can be successfully removed.

One of the requirements that most mortgage bankers and investors adhere to is that your property has grown in equity by 20%. Lets put it in simple terms. The value of your property is $100,000. That means that your mortgage loan must be $80,000 or less than 80% of the total value. Most mortgage bankers and investors will accept a Certified Real Estate Appraisal from an independent Certified or Licensed Real Estate Appraiser. One of the specialties of Appraisals For You, Inc., is to provide you with a Certified Appraisal and analysis of your property as it relates to PMI elimination.

The certified appraisal, which is a legal document, is prepared by the Certified Real Estate Appraiser who performs a valuation analysis, compares your property to others in your neighborhood, and takes into account improvements made of your property since your purchase. At that point, the " present market value" is established and the Certified Real Estate Appraiser renders an unbiased opinion of value of your property which is submitted to you and your bank, mortgage banker or private mortgage investor.

You should note that you may have purchased your home substantially below its then existing market value. In this case the PMI is generally factored by what is called Loan to Value Ratio of the price you paid for the home. For example if you purchased your home for $80,000 and at the time you made the purchase, it was really worth $100,000 based upon an appraisal, then you may qualify for PMI elimination. In either case, you will need to order a new appraisal to demonstrate to the bank, mortgage banker or investor the present value of your property and the increased equity, value or value differential that exists.

Most banks, mortgage bankers and investors require that your mortgage be at least 1 to 2 years old (known as seasoning) before the lender will consider entertaining a request for the removal of PMI.

It is recommended that you contact the customer service office of your bank, mortgage banker or investor for their PMI elimination policy. Keep in mind that recent Congressional action puts the law on your side.

TAKE ACTION

Chances are your mortgage investor will never notify you that you can eliminate PMI. Therefore, it is up to you to initiate the required action for successful PMI removal from your monthly payments.

For more information and a confidential analysis of your property, feel free to contact Appraisals For You, Inc. at info@AppraisalsForYou.com or call us at 631-831-0152.  We will be more than pleased to discuss your PMI position with you and your mortgage investor.