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By PRWEB
PMI is required isurance for persons buying a home with less than 20% down
payment. With property inflation some owners may benefit by the increased
equity and can thus cancel the insurance. Thousands are paying for insurance
they are not required to have. Insurers do not readily advise mortgage
holders of their PMI status. Mortgage holders must be aware of their
unnecessary PMI policies and pursue cancellation when no longer legally
required.
(PRWEB) October 30, 2004 -- An estimated $1.3 BILLION a year is being
extracted from the pockets of hard working Americans striving to afford a
house of their own. Every day thousands are paying for mortgage insurance
they don’t need.
If you bought a home with less than 20% down within the past few years, the
housing boom may have pushed your equity over the 20% threshold, making
private insurance superfluous. PMI (Private Mortgage Insurance) is a hidden
insurance that lenders require low-down-payment borrowers to take out. The
insurance protects the lender against default. This hits about a quarter of
all home buyers.
An act of Congress on Jan. 23, 1999 requires automatic cancellation and notice
of cancellation rights once the outstanding balance of your mortgage drops
below 80% of the value of your home. But one thing you don’t want to do is
rely on the government to get rid of your PMI. The average term of most PMI
policies is 17 years (14 years longer than needed). The policy can be so
expensive that a year’s worth of premiums can add up to a 13th mortgage
payment each year.
Dumping your PMI won’t be easy. To prove your property qualifies for removal
of PMI payments, you may have to pay for an appraisal. Look at your annual
escrow account statement to see how much you pay for PMI each month. You
don’t want to shell out the cost of appraisal fees and then find you are
still shy of the 20%. Better still, call your lender and ask if you are being
charged for PMI. If you’ve paid off 20% of the loan’s original appraised
value, you can request that it be canceled.
The average cost of private mortgage insurance is around $85 per month. It’s
not the cost that outrages most people – it’s the fact that they often pay on
the coverage long after they have reached their 20% equity, according to some
industry analysts. Rising values may mean you can quit paying PMI.
Canceling or Removing PMI may be an expensive proposition claims G. T. Hewlett
a mortgage reduction consultant.. To learn if you qualify and also to obtain
the OFFICIAL FORM that saves a lot of hassle, take a few minutes at www.bwma.
com/mradvance (http://www.bwma.com/mradvance) . Click on the link “See if you
qualify to remove PMI”, then get the OFFICIAL FORM, to expedite the
cancellation process.
Because PMI premiums are un-itemized, as to your overall monthly mortgage
payment, you may not even be aware that you are paying the premiums. This may
be a serious liability to you, if you are paying and have no legal obligation
to pay. By keeping the policy in force, the lender can foreclose on your home
quicker. By applying those premium dollars to the principal, your payment
amount will be the same but you will own your home 6 to 8 years sooner,
saving tens of thousands of dollars.
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