Private Mortgage Insurance allows an individual to purchase their home with less than a twenty percent down payment. If the current loan balance of your home is less than eighty percent of the home's current market value it is time to stop paying monthly into an escrow account for PMI and start putting that money into your pocket. The homeowner should get an unbiased second opinion about the value of the home. A realtor who is familiar with the area may be to help with a valuation through a comparative market analysis. A preliminary consultation with a trained appraiser familiar with your area could also help the homeowner.
There are several possible ways one may have achieved enough equity in this home to qualify for a PMI free mortgage:
Owner has paid enough to reduce the principle mortgage balance below the 80% Loan-To-Value.
The home has appreciated sufficiently enough so that the mortgage balance is 80% or less Loan-To-Value.
The owner has upgraded the home so that the new appraised value will yield at least 20% equity of the current market value.
Upgrades include making significant improvements such as adding decks, patios, finishing basements, updating kitchen and baths or making other additions to the home or real property. Improvements that are typically not considered upgrades include window treatments or decorating.
If the homeowner believes that the above criteria has been met, the next step is to contact the current lender requesting information on the requirements to remove the PMI coverage. The most common conditions are, but not limited to, the following:
A minimum period of time has elapsed since the loan closed. This may vary from as few as six months to more than two years depending on the investor.
The loan is current with no history of late payments.
A new independent appraisal performed by a lender approved appraiser. The homeowner will be required to pay the appraisal fee that is quoted on an individual basis by the appraisal professional.
The loan balance must be below 65% to 80% of the current property value.
G Mason Appraisals has experience in appraisals for the removal or reduction of PMI fees.