If you are a homeowner that was required to purchase Private Mortgage Insurance as a condition of approval on your loan, you are not required to carry this insurance forever. There are steps you can take and laws to protect you from paying too much for this useless insurance. Here is what you need to know about your Private Mortgage Insurance. Homeowners that purchase homes with less than twenty percent down may be required to purchase Private Mortgage Insurance. This insurance protects the mortgage lender from certain losses in the event of foreclosure. Private Mortgage Insurance does absolutely nothing for the homeowner except drive up their monthly mortgage payment. Fortunately, the Homeowners Protection Act of 1988 protects homeowners from the abuses of Private Mortgage Insurance by establishing rules lenders are required to follow regarding cancellation of these polices. If you have a VA or FHA mortgage however, this law does not apply to you. If you were required to purchase Private Mortgage Insurance after July 29th of 1999, your insurance will be terminated when you have 22% equity in your home. This 22% is based on the original appraised value of your home with the condition that all of your mortgage payments must be current. You do not have to wait until you have 22% equity; you can request that your policy be cancelled when you have 20% equity if your mortgage payments are current. Private Mortgage insurance is expensive; it is in your best interest to make all of your mortgage payments on time so your policy can be cancelled early. To learn more about saving money on your mortgage and avoiding common homeowner mistakes, register for a free mortgage guidebook. |
