How Can I Reduce My Monthly Mortgage Payments?
Stop Paying PMI Insurance!
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Over 50% of all mortgage loans have mortgage insurance (PMI). | |
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A 1998 federal law requires lenders to allow you to drop your PMI once you have 20% equity in your home. | |
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To drop your private mortgage insurance you may need an appraisal by a state certified appraiser. Any improvements you have made since purchasing your home will be reflected in the report. |
The Home Owner Protection Act, dated July 28, 1998, and effective July 29, 1999, requires an annual notification of PMI removal. PMI is no longer necessary once homeowners have 20% equity in their house. Automatic notification of cancellation only applies to loans originated after July 29, 1999. On loans originated before that date, the homeowners must request cancellation.
How much can I save?
Contact
your lender for the exact amount. PMI rates usually vary between $0.35 -
$0.80 per $100 (depending upon your loan amount).
| Monthly PMI Cost | |||
| Original Loan Amount | 5% Down | 10% Down | 15% Down |
| $100,000 | $60 | $40 | $30 |
| $150,000 | $90 | $60 | $45 |
| $200,000 | $120 | $80 | $60 |
NOTE that these amounts are MONTHLY!!!!
Calculate your PMI Threshhold here.
Lender
criteria varies widely for PMI removal. Your
first step is to contact your lender
(the company you send your payments to). Contact information should be on your
payment stub or invoice. Request a letter outlining the specific requirements
your loan must meet in order to qualify for PMI removal.
If you don't know your current
loan balance or the amount of equity
needed to meet their loan-to-value (LTV) threshold, be sure to ask them
for that information.
An
important point we would like to stress is that if your lender says your loan
balance should be below 80% of your home's value that is your home's current
value, which is not necessarily what you paid
for your home. So it doesn't mean that your loan balance has to be below 80% of
the original sales price. Paying down the loan via monthly payments is one way
to decrease the loan to value ratio, however your house may have appreciated in
value since you purchased it. In addition if you have made significant
improvements to your home the value may have increased.
Step
2 - Do You Qualify?
We
are using the figure of 80% because it is a rule of thumb. Check with your
lender for their specific requirements. There are literally hundreds of loan
programs, all with different requirements so make sure, before you do anything,
that you review YOUR lender's
"PMI Letter".
If
you have paid off at least 20% of your original
loan amount there should be no need to establish your home's current value.
However, if you think you meet your lender's LTV requirements based on
appreciation in value since you purchased your home or if you have made
significant improvements to your home, the lender in most cases will require an
appraisal.
Step
3 - Get an appraisal
Once
you've checked with your lender and determined that you are a candidate to
have the PMI removed from your loan your lender will most likely tell you to get
your home appraised. Snyder Appraisal Services is experienced in helping
folks just like you rid themselves of unneeded and unwanted PMI insurance.
Be sure that you request Snyder Appraisal Services if the lender asks you for your choice of appraisal firms. More than likely we are already on their "approved list", and if not we will provide your lender with the necessary documentation to become approved.
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