PMI Removal
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Over the past few years, the real estate market in the Boston and Suburban Areas have been very active while overall property values have generally seen substantial rates of appreciation. Recently, we have been seeing an increase of homeowners seeking to remove their monthly Private Mortgage Insurance (PMI) payment. PMI is an insurance policy that protects the lender from losses when a mortgage with a low down payment becomes delinquent. The lender usually requires PMI if the borrower makes a down payment of less than 20 percent of the homeís sale price. However, if your home has appreciated in value since you purchased it, you may qualify for removal of PMI insurance. Improvements made to your home may also increase its value and your equity in the property.

Example:

$100,000 purchase price less $10,000 (10%) down payment results in a $90,000 mortgage (90% Loan to Value)

If there has been 20% appreciation since the purchase, then the current value of the home is now $120,000. With a mortgage of $90,000, the owner would now have approximately 25% equity. This does not factor in any principal, which may also have paid down the mortgage.

The above example has been included for demonstration purposes only. Your situation will vary according to the loan program you currently have, payment history and your lending institutionís guidelines.

If you have owned your home for at least one year or have made substantial renovations to the property, you may want to contact your lender and inquire as to their procedure for PMI removal. In addition, you should ask for their requirements regarding the selection of an appraiser. Some lenders may prefer to choose their own appraiser, while others may require that an appraiser be selected from their approval list. Other lenders allow the homeowner to choose their own state Certified or Licensed appraiser. Your lender will inform you of their individual procedure.