If you are carrying Private Mortgage insurance (PMI) you were able to purchase your property with a lower down payment. However, that does not necessarily mean that you need to keep paying it for the life of the loan. PMI is a monthly payment into escrow that you could keep in your own bank account. While it is easy to keep dutifully paying your mortgage payment month after month without worrying about the details, but what if you could have a lower payment each month by eliminating the PMI portion of the payment? You may be paying for insurance that you don't even need.
Many homeowners don't realize that they only need to continue to make PMI insurance payments once they have reached a certain level of equity in their home's value. In California, once 20% equity is reached either through a reduction in principal or appreciation in home value you no longer are required to carry PMI. This may also be affected by factors such as home improvements or additions. If this level of equity is reached, the value of the property collateralizes the loan and you can cancel the PMI policy that covers your property. There are only two things you need to do: request the PMI be canceled in writing and furnish proof to your lender that you have sufficient equity in excess of 20% of the mortgage.
Recent legislation known as the Homeowners Protection Act (HPA) requires servicing lenders to inform homeowners if they are paying PMI as a part of their mortgage payments as well as the conditions for PMI cancelation. In most cases, the proof to meet these conditions can be met by way of a state-certified real estate appraisal. However, even if you have not received the notification you are still able to start the process yourself by ordering a home appraisal for this purpose. If the equity of 20% is reached you will be able to cancel your PMI with a single letter.
Your mortgage insurance helped you to purchase your home when you needed it the most, but there is a point when you are no longer benefiting from making these payments. By eliminating this expense you may be able to use the savings for a more productive purpose such as home maintenance or investments for your future. Hooks and Associates is here to help you eliminate unnecessary PMI payments. Our appraisal services in Palos Verdes, Torrance, and greater Los Angeles area can provide the proof you need to cancel your PMI.
Contact us today for a free appraisal quote and take the first step toward a lower monthly mortgage payment.