What is PMI (Private Mortgage Insurance)?
How much can I save?
How do I cancel my PMI?
If I don't need it now, why did I need it before?
Is this legal?
How much will this cost?
CONTACT US | ORDER
AN APPRAISAL
SAVE
NOW | PMI
FAQ | REMOVAL STEPS | HOW
IT SAVES $$
What is Private Mortgage Insurance?
Private Mortgage Insurance (PMI) is an insurance policy that is
required by mortgage lenders for all home loans that exceed 80% of
the home’s value. The insurance premium is paid as part of
the monthly payment by the borrower. This insurance policy protects
the lender if the borrower defaults on the loan. This policy does
not benefit the borrower.
Back to top
How much can you save?
The amount you can save by eliminating your PMI payments will vary.
This payment can range from less than $100 up to several hundred
dollars per month. Your monthly payment is based on the original
loan amount and loan to value ratio.
Back to top
How can you cancel your Private Mortgage Insurance?
The Homeowners Protection Act of 1998 requires lenders to cancel
Private Mortgage Insurance under certain circumstances. The conditions
for PMI removal vary depending on several factors including original
loan date, original loan to value ratio, and payment history. Minnesota
law allows you to cancel your PMI based on the current market value
of your home. The first step to removing your PMI is to contact your
lender. They will tell you your current loan balance and if you meet
their minimum requirements. If you believe that your loan to value
ratio is 80% or less, you will need to have an appraisal done for
your home.
Back to top
If I don't need it now, why did I need it before?
Private Mortgage Insurance allows borrowers to purchase
their home with less than a 20% down payment. The only way mortgage
lenders will provide these high loan to value ratios is if they are
insured against a loss that may occur should the borrower default
on the loan. If you secured a loan with higher than 80% loan to value
ratio, a premium for Private Mortgage Insurance is included in your
mortgage payment. This insurance is paid by the borrower but will
only benefit the lender in case of default on the loan.
As soon as your property value increases and your loan to value
ratio is 80% or less, you are no longer required to make this premium
payment. Example: Let's say you paid $150,000 for your home and secured
a 90% loan (borrowed $135,000) and you bought your home 2 years ago.
It is possible that due to the recent market appreciation in the
Twin Cities metropolitan area that your home is now worth $170,000.
If that is the case, you no longer are required to pay Private Mortgage
Insurance.
Back to top
Is this legal?
Absolutely. Here are two links to the Minnesota Attorney General's
website explaining your legal rights regarding PMI.
Private Mortgage Insurance Fact Sheet
Back to top
How much will this
cost?
The only cost to you as a homeowner to eliminate
your Private Mortgage Insurance is the cost of an appraisal. A full
appraisal on a typical
metropolitan home is $325. However, if you own a high-value home,
live in a rural or semi-rural area, have acreage or your property
has complex characteristics your appraisal fee may be higher. This
fee will be quoted to you before the appraiser inspects your property.
The appraisal fee is due at the time of inspection. If after the
inspection the appraiser decides your home’s loan to value
ratio will not be less than 80% you can choose to stop the appraisal
process and you will be refunded your money minus a trip fee of $100.
A typical homeowner will begin to save money after 3-6 months of
having their Private Mortgage Insurance removed. For example, if
your PMI payments each month are $100 the cost of the appraisal
will be covered in the 4th month after your PMI payments stop.
Back to top
