If you continue to carry PMI which is no longer required it will only decrease the amount of money in your bank account.
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PMI is the acronym for private mortgage insurance. Private mortgage insurance appraisals protect the investor against loss if the borrower stops making payments due to certain reasons. Very often, homeowners pay this insurance many years after it’s no longer required and end up paying thousands in useless insurance. PMI allows people to purchase their homes with less than a 20% down payment. Once you’ve reached 20% equity in your home, you can ask the lender to cancel the private mortgage insurance, in writing that the private mortgage insurance be canceled.
There has been an increase in the mortgage insurance industry because of the popularity of purchasing homes with less than 20% down. PMI does not guarantee to protect a homeowner against any loss. All dealings concerning mortgage insurance are handled by the lender and all decisions are made by the lender regarding the mortgage insurance. Thus it is important to be in regular contact with the lending institution which services their mortgage to inquire about the requirements to have the mortgage payments canceled.
Your loan servicer should be able to help you with the cancellation procedure and inform you exactly how much the remaining mortgage balance is and their policies regarding this procedure. It is also important to ask the lender in writing about their requirements to cancel PMI insurance. The ultimate decision is made by the lender, and they’ll take many factors into consideration including the borrower’s payment history. Although mortgage insurance allows you to purchase a home, there will come a time when this extra added monthly expense will no longer benefit you, and it's your responsibility to cancel it. If you continue to carry PMI which is no longer required it will only decrease the amount of money in your bank account.
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