How to Get Out of PMI

A number of people feel that it is a waste of money to spend on Private Mortgage Insurance (PMI). Instead they believe that it is better to use the amount to pay off your mortgage or cut down other things in your budget. Luckily, the federal government approved legislation that needs lenders to automatically remove your PMI coverage when your home’s equity gets to a particular value. The legislation is known as The Homeowner’s Protection Act of 1998. Be aware that there are a lot of ways to get out of Private Mortgage Insurance.

Instructions

  • 1

    Find your home’s value and your pending payment

    First of all, find the approximate net worth of your home along with the amount you still have to pay. This can be done by viewing your last mortgage statement. After that, divide the amount pending by the net worth of your home. For instance, if you owe $40000 on a home valued at $50000, 40000 divided by 50000 is 0.80 which is a 20 percent equity and that is good for you.

  • 2

    Call the mortgage company

    Get in touch with your mortgage company and check what is required in order to get out of PMI. According to the laws, the company should remove your PMI if you have 22 percent equity, a good credit history and no liens on your home. Ask them what is required to drop down the PMI coverage in the range of 20 to 22 percent equity amount. Urge the lender to send you the important paperwork so that you can ask for the removal of PMI. Be sure to go over each detail in the paperwork so that you know what to fill out. Also, arrange a professional appraisal if it is required.

  • 3

    Further instructions

    Complete the PMI cancellation forms and send them. Be in touch with your lender on a regular basis until you get confirmation of the cancellation. If the lender does not cancel the PMI, tell him to give you a written explanation for the refusal to cancel it. Know that the lender needs to remove the coverage if your equity gets to 22 percent. Also, be patient as it will not take much time to reach this percentage.

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