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Sometimes they will end automatically
when the loan value reaches 78 percent.
Other times it may require the borrower
to pay for an appraisal or a Broker Price
Opinion (BPO), which is typically a
real estate comparison. In that case
it depends on the housing market in
the borrower’s area. Other times, a
borrower might choose to refinance,
which would end mortgage insurance
payments if the borrower refinances to
less than 80 percent of the home’s value.
based on the original property value.
The Homeowners Protection Act of 1998
does come with some exceptions though.
If your loan is considered “high risk”, if
your property has additional liens, or if
you were not current on your mortgage
within the year prior to termination or
cancellation, you could be stuck with
PMI until those issued are resolved.
Additionally, it does not cover FHA
loans, VA loans, or loans with lenderpaid MI.
THE HOMEOWNERS PROTECTION HOW CAN I AVOID MORTGAGE
ACT OF 1998 (HOW TO GET RID OF INSUR ANCE ALTOGETHER?
You can avoid paying private mortgage
MORTGAGE INSUR ANCE)
The most popular question regarding
private mortgage insurance is how
to cancel it? Fortunately, there are
many ways it can be canceled. In
the past, homeowners continued to
pay PMI even after their LTV (loan
to value), fell below 80% because the
banks and mortgage lenders were not
required to notify borrowers. It used
to be the responsibility of the borrower
to cancel PMI once they reached the
80% LTV mark, but recent laws have
forced the banks and lenders to take
responsibility as well. The law requires
home mortgages signed on or after July
29, 1999 to automatically terminate
PMI once the homeowner reaches 78%
LTV or gains 22% equity in their home,
insurance altogether while putting
minimal money down by utilizing a
combo loan. If you keep your first loan
at 80% LTV or less, and add a second
loan of 10% or less, you can still obtain
90% financing without paying PMI.
Along with that, you’ll likely snag a
lower blended mortgage rate by splitting
the loan up.
SELECT LIVING
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2015 EDITION - ISSUE 1