Want to know how to cancel the PMI on your mortgage? Orange County homeowners and buyers across the country are interested in PMI but few people know how to deal with it but there are different things that any homeowner can do to eliminate their PMI.
What Is PMI?
PMI or Private Mortgage Insurance is something that is required by Freddie Mac and Fannie Mae, on mortgages, that are estimated to have been calculated to have a Loan-To-Value or LTV, of more than 80%.
What does this mean to the non real estate professional? If someone is planning on buying a home, they must be prepared to put down at least 20% or they will be required to pay PMI. But, in some cases the borrower can request that the lender eliminate the PMI completely, especially under these scenarios:
- The principle balance on a homes mortgage has reached at least 78%. Once this happens most banks will cancel the PMI or the borrower can request that the lender cancel it.
- The borrower has made improvements to their home and the homeowner now has 20% or more equity in the home/property. When this happens the borrower can request that the lender do a new appraisal on the home and if the borrower is correct, the PMI will be canceled.
- Home values in the neighborhood have increased and the borrower now has at least 20% equity in their home.
Paying Down Principle
One of the best ways for any homebuyer to have their PMI canceled is by their mortgages principle balance and achieving a Loan To Value (LTV) ratio of 80%. When this happens the
homes value will have increased and the PMI may be canceled.
To learn more tips about canceling your PMI or to view the latest Orange County homes for sale, contact Fred Sed & Associates today at (949) 272-0125.