Private Or Personal Mortgage Insurance

When you get a mortgage loan to purchase a home, most banks require that you have some sort of a down payment if the amount of the loan is more than 80% of the value of the home. They usually require that you have a 20% down payment. If you do not have that down payment, the bank will require you to have personal mortgage insurance. Many people taking out loans ask, "What is personal mortgage insurance?" Personal mortgages insurance, also known as PMI, is extra insurance that the lender will require you to have to assure them that they will be paid for the loan in case you cannot make the payments.

You can speak to your lender or another insurance agent about private mortgage insurance. They can explain personal mortgage insurance to you and answer any questions you may have about the insurance and how it works. They can also give you the current private mortgage insurance rates based on your balance on your loan. One benefit that is now available is the ability to take a personal mortgage insurance deduction off your taxes. This makes getting a mortgage even easier and better. Private mortgage insurance does not have to be continued when the balance of the loan goes down enough so it is 80% or less of the value or your equity in the home gets to 20%. The lender has the responsibility of talking to you about your rights regarding ending your private mortgage insurance early. You may be required to have a current appraisal done on your home to prove the new value. The insurance company may give you a free calculator for private mortgage insurance so you can keep track of your equity and PMI insurance requirements.

There are private mortgage insurance cancellation laws that state that the lenders must notify you at the loan closing of the loan that they have private mortgage insurance and may cancel it in the future. They must also give the buyer an annual statement reminding them they have the PMI and that they may cancel it as soon as they have met the cancellation requirements. The lender also must cancel the PMI if the buyer requests it and the balance of the loan is 80% of the value. The lender must automatically terminate the PMI when the balance is 78% or less. There have been lawsuits regarding private mortgage insurance when the lenders have not met these requirements. If you have a private mortgage insurance calculator, it is in you best interest to keep track of it yourself.