PMI
costs vary from one mortgage insurance
firm to another, but premiums usually
run about 0.50 percent of the loan
amount for the first year of the
loan. Most PMI premiums are a bit
lower for subsequent years. The
first year's mortgage insurance
premium is usually paid in advance
at the close of escrow, and there
is usually a separate PMI approval
process.
Lenders
generally turn to a list of companies
with whom they regularly work when
lining up private mortgage insurance.
In
most cases, PMI can be dropped after
the loan to value ration drops below
80 percent. The Homeowners Protection
Act requires PMI to be dropped when
the loan-to-value ratio reaches
78 percent of the home's original
value AND the loan closed after
July 29, 1999. For other loans,
find out from your lender what procedure
to follow to have PMI removed when
your equity reaches 20 percent.
For
homeowners who have improved their
properties and believe that their
equity has increased as a result
of these improvements, refinancing
the property at a loan-to-value
ratio of 80 percent or less is another
possible way of eliminating PMI
payments.
