Boise PMI Removal Services
PMI is a type of insurance that mortgage lenders use. PMI helps to reduce the risk of loss specifically on mortgages with low down payments in the range of 3-10%. It is typically required on mortgages with a balance of more than 80% of a home’s value.
When a mortgage lender’s overall risk on a relatively high-ratio mortgage loan is lowered, they are in a better position to underwrite additional loans with similar risk to more customers which some say, helps to keep our economy in relative harmony. That’s the upside. The downside is PMI is expensive and depending on the buyer’s credit score, the costs can be in the range of $40-50 per month per $100,000 borrowed. That can add up quickly, especially when multiplied by the number of years that your PMI remains in place.
Depending on market conditions, it may take several years to reach a point where your principal balance is just 80% of the original amount of the loan, so it’s essential to keep up on how your home here in the Boise Idaho area has increased (or decreased) in value. As a word of caution, home values are not always in-step with what some of the national web sites indicate. Your specific neighborhood or home may or may not conform to national real estate trends. Even when nationwide trends lines are projecting up in a growth pattern, or down, it’s important to note that all real estate is local.
Fortunately for homeowners, there are some built-in protections giving them the ability to remove PMI when the “numbers are in their favor.” In fact, it’s required by law under the Homeowners Protection Act of 1998.
The Homeowners Protection Act obligates lenders on most loans to automatically stop the PMI when the principal balance of the loan reaches 78% of the original loan amount. The law further defines terms that, at the homeowner’s request, PMI must be released when the principal amount equals just 80%. Prudent homeowners who stay informed and engaged could remove the PMI and start putting that money back in their own pocket slightly ahead of the 78% loan to value ratio – if they’re proactive about monitoring their home values.
PMI can be removed in several ways including simply paying down your mortgage, or in some cases refinancing under different terms.
Most commonly, removing PMI is accomplished with an appraisal to establish current market value and more importantly, in the case of PMI – to demonstrate independently that the mortgage balance has fallen below 80% of the home’s current value.
There are additional fine print items, so it’s important to do your research.
The first step is to contact the lending institution where you send your mortgage payments (also known as your loan servicer). This may or may not be the lender who gave you the loan originally. Sometimes home loans are brokered from the loan originator to a secondary institution. Your current loan servicer will be able to help you with the cancellation procedure and will also be able to tell you exactly how much your remaining mortgage balance is. Every loan servicing institution can have different policies regarding this procedure. Ask your servicing lender to provide in writing their specific requirements to cancel PMI insurance.
Keep in mind it’s the servicer’s ultimate decision and they’ll take many factors into consideration including the borrower’s payment history over the life of the loan before allowing you to drop this insurance. This factor alone could alter the servicer’s decision.
Per the Consumer Financial Protection Bureau (CFPB), you must at minimum meet the following conditions in order to have your PMI removed:
- A request to remove PMI must be in writing.
- You must have a stable payment history and remain current on your monthly payments.
- Your lender may require you to certify that there are no junior liens (such as a second mortgage or “cash out refinance”) on your home.
- Your lender will most likely require that you to provide market support (for example, an appraisal) that the value of your property has not declined below the value of the home when you first bought it. Clearly, if the value of your home has decreased, you may not be able to remove PMI until the market shifts or until your mortgage balance is reduced.
Most lenders require a real estate appraisal by a State Certified Appraiser as the primary proof required to eliminate unnecessary PMI insurance.
At ‘Appraisal One’ we specialize in helping people like you to rid themselves of unneeded and unwanted PMI insurance.
We offer a free initial consultation and will help you to determine if you have sufficient equity in your home to enable you to cancel your PMI.
Want to learn more about PMI and the Homeowners Protection Act? Click this link: https://www.consumer.ftc.gov/