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What Is PMI?
PMI is insurance lenders require from most home buyers who need loans that are more than 80 percent of their new home's value. In other words, borrowers with less than 20 percent down would normally need PMI unless they were to use a first and second loan combination known as 80/20, 80/15, 80/10 or any combination of the two loans.
How Do You Cancel or Terminate PMI?
In order to cancel your PMI under the new HPA law you need to pay the balance down to 80% of the original purchase price. You also need to have a good payment history with no 30 days late in the previous year or 60 days late in the previous two years. If you have a second mortgage or your home is worth less than what you originally bought it for, expect to have some additional requirements. Remember the new law still does not require lenders to cancel PMI based on "current property value" all figures must be on original purchase price or original appraisal.
It is in no way shape or form LIFE insurance.
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