Does your monthly mortgage payment include a PMI charge? Private Mortgage Insurance, sometimes called Mortgage Insurance Protection, is assessed on homeowners that have less that 20% (some lenders require 25%) equity in their home. By law, mortgage lenders are required to allow you to remove PMI once you reach the required equity. In other words, the principal balance of your loan needs to be at or below 80% of the original loan amount. Alternatively, if the appraised value of your home is 20% or more of your balance then you qualify for having your PMI removed or deleted from your monthly mortgage payment.
Since Phoenix home values have been steadily on the rise, it may be a good idea to contact your lender and see if you are indeed paying PMI. If so, it may be time to evaluate what your home is currently worth as compared to what you currently owe. After all…
The additional cost of PMI to a $200,000 mortgage can be from $60 to $120 per MONTH!
What Needs to be Done to Remove PMI?
First, contact your lender and verify that you are paying a mortgage insurance premium. You’ll also need to get the exact outstanding balance on your mortgage loan. If you feel that your home’s value has gone up enough to reach the 20-25% mark, then you’ll need to talk to your lender about the steps involved in having an appraisal performed for PMI removal. Be sure to ask if you can hire your own appraiser or if you must go through an appraiser selected by the bank. If you can use your own, then give us a call!