Posted on: 06th Apr, 2009 03:53 pm
The value of my house has dropped considerably over the last couple of years. I currently pay PMI but want to get rid of it. I am able to pay my mortgage down to 78% of the original loan (not to 78% of the current value of the home). Is this enough to cancel PMI or would I need to get another appraisal?
The first step is to contact your mortgage company and ask some questions. Call them and have them send you the requested info. You'll want to know three things. First, what is the equity threshold required to cancel PMI. Usually 20 to 25% depending on who holds the mortgage.
Secondly, you'll want to know if an appraisal is required. And, if so, are there approved appraisers that you must use. Expect to pay approximately $400 for the appraisal.
Finally, find out where to send your cancellation letter. It may be the same address where you send your monthly payment. But, you want to be certain. So ask.
Once you know that you can go to work. Get the appraisal done. Assuming that it shows that you are over the threshold for canceling PMI, write a letter to your lender questing cancellation. It doesn't need to be fancy. The letter should include the current value of your home, the amount of your loan, and a sentence saying that you want to terminate PMI. Include a copy of the appraisal with the letter.
Some might consider it overkill, but sending the letter via certified mail or overnight service is a good idea. That way you have positive proof of it's receipt.
But, an appraisal plus a letter (or forms) should put an end to the monthly PMI. And, using the money freed up to reduce his principal is a great idea!
Secondly, you'll want to know if an appraisal is required. And, if so, are there approved appraisers that you must use. Expect to pay approximately $400 for the appraisal.
Finally, find out where to send your cancellation letter. It may be the same address where you send your monthly payment. But, you want to be certain. So ask.
Once you know that you can go to work. Get the appraisal done. Assuming that it shows that you are over the threshold for canceling PMI, write a letter to your lender questing cancellation. It doesn't need to be fancy. The letter should include the current value of your home, the amount of your loan, and a sentence saying that you want to terminate PMI. Include a copy of the appraisal with the letter.
Some might consider it overkill, but sending the letter via certified mail or overnight service is a good idea. That way you have positive proof of it's receipt.
But, an appraisal plus a letter (or forms) should put an end to the monthly PMI. And, using the money freed up to reduce his principal is a great idea!