If you are a homeowner, you will want to be aware of a new law that establishes rights for homeowners and rules for lenders regarding private mortgage insurance (PMI) cancellation. With this knowledge, you may eliminate premiums you may be paying unnecessarily.
What is Private Mortgage Insurance (PMI)
PMI is extra insurance that lenders require from most homebuyers who obtain loans that are more than 80 percent of their new home's value. In other words, buyers with less than a 20 percent down payment are normally required to pay PMI.
Canceling PMI : Once the principal is reduced to 80% of value, the LMI is no longer required. This can occur via the principal being paid down, home value appreciation, or both. Under HPA (Homeowner's Protection Act of 1998), you have the right to request cancellation of PMI when you pay down your mortgage to the point that it equals 80 percent of the original purchase price or appraised value of your home at the time the loan was obtained, whichever is less.
For more information on Private Mortgage Insurance, read the rest of the article in Rentlaw.com.
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