Does your monthly mortgage payment include a PMI charge? Private mortgage insurance, or PMI, is assessed on homeowners that have less than 20% (some lenders require 25%) equity in their home. By law, mortgage lenders are required to allow you to remove PMI once you reach the required equity. In other words, the principal balance of your loan needs to be at or below 80% of the original loan amount. Alternatively, if the appraised value of your home is 20% or more of your balance then you qualify for having your PMI removed or deleted from your monthly mortgage payment. It may be a good idea to contact your lender and see if you are indeed paying PMI. If so, it may be time to evaluate what your home is currently worth as compared to what you currently owe.
Many lenders require a homeowner to have at least 20-23% equity (differs slightly between lenders and loan types) in their home before they will allow PMI to be dropped from the monthly mortgage amount. A homeowner’s equity in a home can increase from a variety of factors: increasing home prices, regular or expedited payments off the principle balance, remodeling and updating of a home, and construction of amenities (e.g. outbuildings, pools, garages) are a few examples.
Some lenders have implemented minimum time limits before PMI can be removed regardless of the amount of equity in a home. It’s important for the homeowner to find out if the lender has implemented any minimum time limits before the process of removing the PMI.
First, contact your lender and verify that you are paying a mortgage insurance premium. You’ll also need to get the exact outstanding balance on your mortgage loan. If you feel that your home’s value has gone up enough to reach the 20-25% mark, then you’ll need to talk to your lender about the steps involved in having an appraisal performed for PMI removal. Be sure to ask if you can hire your own appraiser or if you must go through an appraiser selected by the bank. If you can use your own, give Lexington Appraisals a call.
As a trusted Georgia home appraiser since 2001, Lexington Appraisals will provide you with the service, details, and speedy home appraisal reports many of our customers have come to expect. We at are here to help you. Contact us for your complimentary consultation and detailed quote.