Is It Time to Get Rid of PMI?Article Posted by Expert Author: Tony Caro on 04/08/2013
PMI stands for Private Mortgage Insurance and it is not always very popular with mortgage holders. This includes first time borrowers and home mortgage refinance borrowers. The concept of the mortgage has some merits though. It is designed to offer financial protection in case it is not possible to make mortgage payments. At some point, those with PMI may feel it would be best to get rid of it. This does raise questions regarding when it would be advisable to actually cease PMI. First, you must realize there are certain requirements that must be in place prior to eliminating PMI. Basically, you must reach 22% equity in the home based upon the original property value. This will yield and automatic cancellation of the policy. However, you can cancel the policy at your bequest when you have reached 20% equity based on the value of the original property. Be mindful of one thing: if you feel you may run into financial difficulties, you may wish to avoid canceling the insurance prior to the automated threshold.
Many borrowers find that when they refinance home mortgage with certain scenarios they may end up having to pay PMI every month. That is one expense you'll want to take into consideration before you make any specific plans to move forward.
Article Posted In: Useful Articles Refinance Home Mortgage