SayLending.com

Private Mortgage Insurance (PMI) is required for all home buyers who cannot raise at least 20% or more for the home purchase.

Lenders will make loans at lower down payments provided that the home buyer gets Private Mortgage Insurance (PMI).

For more information about PMI: http://www.privatemi.com/

If the value of your home increases due to the neighborhood or home improvements,

or if you make enough payments on your mortgage to reduce your balance to 80% of the appraised value, does PMI go away?

Answer: you can cancel your PMI when the lender can be assured that the appraised value of the home has met the 80% threshold.

But note: you must initiate the cancel order — the lender will not do it for you unless:

• you purchase your home after July 29, 1999
• you reach 22% of the original property value
  
• in which case the lender must automatically terminate PMI
  see the FTC site for information

Run the numbers:

Step 1: Get Your Current Mortgage Loan Balance
analyze your current loan payment schedule. Get your mortgage loan payment history from your lender and insert the information into your desktop worksheet:

download FREE to your desktop this loan amortization schedule worksheet (Excel spread sheet)


Step 2: Estimate the Value of Your Home
start by checking home values within your neighborhood:
link to our home valuation section


Step 3: Calculate Your LTV
if the current mortgage loan balance (divided by) the estimated value of your home is less than 80%LTV, you may be able to cancel your PMI.

Example:
Appraised home value: $150,000
Amount of Mortgage: $115,000

LTV: 76.66% ($115,000 / $150,000)

In this example, the homeowner can request the lender to cancel their PMI.

Contacting your lender

• Have available your social security number, loan number, and property address.
  
  
• Explain that you want to cancel your PMI and request that they forward you instructions.
  
  
• Some lenders may have cancellation instructions and forms on their Internet web site.
  
  The lender may require certain items from you:
  
  a) written request for cancellation
  b) a formal appraisal or other on your home
  
  view sample letters: http://www.privatemi.com/
  Comply with the instructions set out by the lender.