Select Living Magazine Issue I | Page 55

- INDUSTRY NEWS - 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 - 55 - 2015 EDITION - ISSUE 1