What is PMI?
Private Mortgage Insurance, aka "PMI", is normally required when you buy a house with less than
20% down. Mortgage insurance is a type of guarantee that helps protect lenders against the costs
of loan default and foreclosure. This insurance protection is provided by private mortgage
insurance companies. It enables lenders to accept lower down payments than they would
normally accept. In effect, mortgage insurance provides what the equity of a higher down payment
would provide to cover a lender's losses in the unfortunate event of foreclosure. Therefore, without
mortgage insurance, you might not be able to buy a home without a 20% down payment.
The cost of PMI increases as your down payment decreases. For example: The cost of PMI on a
10% down payment is less than the cost of PMI on a 5% down payment. Your PMI premium is
normally added to your monthly mortgage payment.
If I Take PMI on my Mortgage Loan, Can I Get Rid of it Later?
The decision on when to cancel private mortgage insurance coverage does not depend solely on
the degree of your equity in the home. The final say on terminating a private mortgage insurance
policy is reserved jointly for the lender and any investor who may have purchased an interest in the
mortgage. However, in most cases, the lender will allow cancellation of mortgage insurance when
the loan is paid down to 80% of the original property value. Some lenders may require that you pay
PMI for one or two years before you may apply to remove it.
Another option to cancel PMI on your loan can occur if the property appreciates and the new, higher
value reduces the loan-to-value on the existing mortgage balance to 80% or less. If so, contact
your lender and if they agree, provide them with a current property appraisal to verify that your
loan-to-value is now at or below 80%.
Of course, another way of removing PMI on your loan is to refinance to a new loan without PMI,
either using a new 1st mortgage if your total loan-to-value is under 80%, or using a "Combo Loan",
which is a 1st & 2nd mortgage, if your loan-to-value is over 80%. We also have a loan program
called "Lender-Paid Mortgage Insurance" where the lender covers the cost of PMI in exchange for a
slightly higher interest rate on the loan.
For more info on Combo Loans, see our FAQ article here
back to FAQ
Private Mortgage Insurance, aka "PMI", is normally required when you buy a house with less than
20% down. Mortgage insurance is a type of guarantee that helps protect lenders against the costs
of loan default and foreclosure. This insurance protection is provided by private mortgage
insurance companies. It enables lenders to accept lower down payments than they would
normally accept. In effect, mortgage insurance provides what the equity of a higher down payment
would provide to cover a lender's losses in the unfortunate event of foreclosure. Therefore, without
mortgage insurance, you might not be able to buy a home without a 20% down payment.
The cost of PMI increases as your down payment decreases. For example: The cost of PMI on a
10% down payment is less than the cost of PMI on a 5% down payment. Your PMI premium is
normally added to your monthly mortgage payment.
If I Take PMI on my Mortgage Loan, Can I Get Rid of it Later?
The decision on when to cancel private mortgage insurance coverage does not depend solely on
the degree of your equity in the home. The final say on terminating a private mortgage insurance
policy is reserved jointly for the lender and any investor who may have purchased an interest in the
mortgage. However, in most cases, the lender will allow cancellation of mortgage insurance when
the loan is paid down to 80% of the original property value. Some lenders may require that you pay
PMI for one or two years before you may apply to remove it.
Another option to cancel PMI on your loan can occur if the property appreciates and the new, higher
value reduces the loan-to-value on the existing mortgage balance to 80% or less. If so, contact
your lender and if they agree, provide them with a current property appraisal to verify that your
loan-to-value is now at or below 80%.
Of course, another way of removing PMI on your loan is to refinance to a new loan without PMI,
either using a new 1st mortgage if your total loan-to-value is under 80%, or using a "Combo Loan",
which is a 1st & 2nd mortgage, if your loan-to-value is over 80%. We also have a loan program
called "Lender-Paid Mortgage Insurance" where the lender covers the cost of PMI in exchange for a
slightly higher interest rate on the loan.
For more info on Combo Loans, see our FAQ article here
back to FAQ
the only place to "Pre-Apply.com"
| The FAST Track About Us Today's Rates Apply with AmeriStar Tools & Info Testimonials Contact Us Rate Alert Tell A Friend Refer A Friend Enter Our Giveaway Number Cruncher Privacy Policy FAQ & Forms |
Locally Owned, Locally Operated
Financing Maryland Homes Since 1999
Financing Maryland Homes Since 1999
SM
Finance My Home Purchase (click the house!) |
Take Out a Home Equity Loan (click the house!) |
Refinance My Mortgage (click the house!) |
| H o w C a n W e A s s i s t Y o u T o d a y ? |
Pre-Apply.com is a service of AmeriStar Home Mortgage, Inc. Information is deemed reliable but not guaranteed,
and is subject to change at any time. Use of this site for informational purposes, and does not constitute a
commitment to lend. Equal Housing Lender. © 2007AmeriStar Home Mortgage, Inc.
and is subject to change at any time. Use of this site for informational purposes, and does not constitute a
commitment to lend. Equal Housing Lender. © 2007AmeriStar Home Mortgage, Inc.
or call toll-free 1.877.PRE.APPLY
(1.877.773.2775)
(1.877.773.2775)
| 877.PRE.APPLY |