Private mortgage insurance could be required on home loan
If you're getting a home loan, the lender may require you to pay for private mortgage insurance, or PMI. Here are some key things to know about PMI and how to get rid of it:
• PMI is typically required by lenders on mortgages in which the borrower is making a down payment of less than 20 percent. It is designed to protect the lender in case the borrower defaults. On a loan of $250,000, PMI may cost you $50 to $220 per month, depending on the size of the down payment and the length of the loan.
• Once you've made enough payments to boost your equity to 20 percent of the original purchase price, you can ask your lender to cancel PMI. By law, the lender must cancel PMI at this point as long as you have a history of on-time payments, you can establish that the property value has not declined, and there is not a subordinate lien — such as a home equity loan — on the property.
• If you can't get PMI removed at the 20 percent level, it gets easier once you reach 22 percent equity (based on the original purchase price). At that point, the lender must automatically cancel PMI as long as you are current on your payments. For certain loans defined as “high risk” by the lender, you must wait until you reach 23 percent equity.
• If you're unable to get PMI removed by either of the above steps, the lender must cancel it once you are halfway through your loan term, provided you are current on your payments.
• The PMI cancellation rules, as defined in the federal Homeowners Protection Act, apply to mortgage loans made since July 29, 1999. But they do not apply to loans made by the Federal Housing Administration or Department of Veteran Affairs. If you have a problem with a lender over PMI cancellation, contact the Federal Trade Commission and your state's attorney general.
Show commenting policy
TribLive commenting policy
You are solely responsible for your comments and by using TribLive.com you agree to our Terms of Service.
We moderate comments. Our goal is to provide substantive commentary for a general readership. By screening submissions, we provide a space where readers can share intelligent and informed commentary that enhances the quality of our news and information.
While most comments will be posted if they are on-topic and not abusive, moderating decisions are subjective. We will make them as carefully and consistently as we can. Because of the volume of reader comments, we cannot review individual moderation decisions with readers.
We value thoughtful comments representing a range of views that make their point quickly and politely. We make an effort to protect discussions from repeated comments either by the same reader or different readers.
We follow the same standards for taste as the daily newspaper. A few things we won't tolerate: personal attacks, obscenity, vulgarity, profanity (including expletives and letters followed by dashes), commercial promotion, impersonations, incoherence, proselytizing and SHOUTING. Don't include URLs to Web sites.
We do not edit comments. They are either approved or deleted. We reserve the right to edit a comment that is quoted or excerpted in an article. In this case, we may fix spelling and punctuation.
We welcome strong opinions and criticism of our work, but we don't want comments to become bogged down with discussions of our policies and we will moderate accordingly.
We appreciate it when readers and people quoted in articles or blog posts point out errors of fact or emphasis and will investigate all assertions. But these suggestions should be sent via e-mail. To avoid distracting other readers, we won't publish comments that suggest a correction. Instead, corrections will be made in a blog post or in an article.
- Safety of credit cards up to banks
- Travelers love to hate cheap airlines
- Volkswagen may compensate vehicle owners for loss of value, CEO says
- PNC fined for paperwork errors on municipal bond offerings
- UAW ups Fiat Chrysler workers’ pay in new proposal
- 2 Fed members push case for rate hike in ’15
- Majority of House members sign petition calling for vote on Export-Import Bank’s charter
- ‘Coffin-nosed Cord’ was ahead of its time
- Alcoa supplying parts for military jets under $1.1B pact with Lockheed Martin
- Miata leaves cutesy behind for sleek
- Stocks wrap best week of year with slight gains