Still Paying PMI? Your Home’s Equity May Hold the Exit Key

 

Still Paying PMI? Your Home’s Equity May Hold the Exit Key

Could it be time for you to review your mortgage to determine the ability to cancel your mortgage insurance premium?  Let’s unwrap the topic and learn more about the executive order signed this week and how it may affect you.

If your downpayment at purchase was less than 20% you are likely paying a mortgage insurance premium.   This premium insures the lender’s investment in your loan in the event of default.  If your equity position changes that calculation you may be able to cancel the policy and save significantly every month. Mortgage insurance premiums typically range from 0.5% - 3% of the loan amount annually.  That actual rate is determined by many risk factors considered by the lender.

Next steps?  The first thing you’ll need to do is call your mortgage company to determine how much you are paying and what documents will be required to cancel. In most cases a new appraisal will be required to support a value of 80% loan to 20% equity.  In other cases, a market analysis may be sufficient.  The next questions will be requirements for the individual or firm determining that market value. If you’ve owned your home long enough a tax assessment may be all that is required.  Actually, pretty simple.

A new executive order has been signed which will automatically cancel the premium when equity reaches the 20% level.  The details haven’t been disclosed yet but rest assured, it won’t be retroactive so in the short-term evaluating your mortgage, mortgage insurance and any other insurance policies should be done annually.  Is it time to call your realtor for help?